TUPE reforms a step in right direction

TUPE reforms were heralded by the coalition. Picture: Contributed
TUPE reforms were heralded by the coalition. Picture: Contributed
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Changes to employment rights a compromise, says John Lee

THREE days ago, a raft of significant reforms to employment rights in relation to the transfer of businesses were introduced. Amendments to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (the so-called “TUPE” Regulations) were heralded by the coalition, in the name of the “red tape challenge” and targeting the “gold plating” of European legislation in the UK’s domestic laws.

Perhaps not wholly welcomed by employees and their representatives, the changes have largely been applauded by employers and their representatives. The reforms fall considerably short of the government’s initial proposals, in a curtailment welcomed by most on either side of the employment divide as sensible.

The ability of employers to dismiss employees or to vary their contracts in the context of their employment transferring has, in the government’s view, been widened. Although that appears to have been the intention, some professional commentators consider this reform unlikely to result in seismic changes in practice. An employee’s dismissal or change of contract will now be struck down where this is “because of” the transfer of a business, as opposed to being “connected with” this. How employment tribunals will interpret this new test remains to be seen. Other reforms include: o Allowing new employers to consult with staff prior to the transfer date for collective consultation purposes in relation to redundancies. These periods of consultation (if meaningful) would contribute to the current 45 day minimum period where 100 or more redundancies are proposed within a 90 day period. Some employees’ champions have argued this disadvantages employees whilst employers would argue this allows them to restructure their businesses more efficiently and notify employees of intended redundancies at the earliest opportunity; o Renegotiation of “collective agreements” post transfer of employment is now permitted, provided this takes place at least one year later and only where, on balance, the benefits of that renegotiated agreement are at least as beneficial for employees – something that will surely benefit both sides; o The law now states that changes which are negotiated to collective agreements and take effect after any transfer date will not bind incoming employers where they have had no involvement in the negotiation of the changes concerned (this change simply reflects current case law but was nevertheless warmly welcomed by industry); o From May, outgoing businesses are obliged to provide a raft of specified employee information sooner - at least 28 days in advance of the transfer concerned (as opposed to 14 days under the previous regime). Some on either side of the relationship would argue that this does not reflect commercial reality and is still not early enough. Most commercial negotiations would have taken place well in advance of this point; o Smaller business (under ten employees) can now directly consult employees in these situations, where no recognised trade union or employee representatives are in place. This will make life considerably easier for smaller contractors who would struggle to find the time to appoint representatives in simple transfers of service contracts, for example.

The government backtracked, following consultation, on its initial proposals to repeal the criteria defining relevant transfers of contracts and declined to follow through with restrictions on the requirement on employers to produce employee information in advance of transfers taking place and on the ability of employees to raise claims where changes are made to their working conditions (as opposed to contractual terms). It has also reneged on its proposal to allow an outgoing employer to make dismissals, relying upon the incoming employer’s circumstances. That was criticised as giving rise to a number of complications and uncertainties for employees as well as for “outgoing” employers.

While some of the consequences of the reforms are difficult to predict, on balance they introduce some much-needed clarity for employers and employees in business transfer situations and are significant improvements.

• John Lee is an associate in the employment team at DWF www.dwf.co.uk


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