TUPE rules on service provision changes to be amended rather than repealed
The government has now published its response to the consultation on reforming the TUPE Regulations and there are a few surprises. In particular, in light of the fact that 67% of respondents were not in favour, the proposed repeal of the service provision change rules is not going to happen. It was felt that specifically including service provision changes within the definition of a TUPE transfer gives some welcome clarity over when TUPE applies.
So, what changes will be made to TUPE?
- The service provision change rules will be amended to reflect the approach set out in case law – for there to be a TUPE service provision change, the activities carried on after the change will require to be “fundamentally or essentially the same” as those carried on before it. This amendment will make little practical difference.
- The rules on employee liability information will be retained but the transferor will be required to provide the information to the transferee 28 days (rather than 14 days) before the transfer.
- The renegotiation of terms derived from collective agreements will be allowed one year after the transfer (even where the reason for the change is the transfer), provided that overall the change is no less favourable to the employee.
- The legislation will expressly provide for a “static approach” to the transfer of terms derived from collective agreements, where the transferee is not a party to the collective agreement or bargaining process. This will mean that only those terms in collective agreements in existence at the date of the transfer will be binding on the transferee.
- Changes in the location of the workforce following a transfer will be able to fall within the scope of “economic, technical or organisational reasons entailing changes in the workforce“. The effect of this will be that redundancies due to a change in location following a TUPE transfer will not be automatically unfair.
- It will be made clear that consultation by the transferee which begins pre-transfer can count for the purposes of complying with the collective redundancy rules, provided that the transferor and transferee can agree and where the transferee has carried out meaningful consultation.
- Micro businesses (those with 10 or fewer employees) will be allowed to inform and consult directly with affected employees where there is no recognised trade union, nor existing appropriate representatives.
In the consultation response the government recognises that the restrictions on agreeing post-transfer variations to terms and conditions can be a barrier to effective transfers. However, it is prevented from relaxing the current rules by European case law on the Acquired Rights Directive and so proposes to “engage with European partners to demonstrate the potential benefits of a harmonisation framework for individuals and the economy”.
The government has indicated that there will be transitional arrangements to allow employers a suitable lead-in period to negotiate future transfers in accordance with TUPE 2014. This will not be as daunting a task as it might have been had the proposals to repeal the rules on service provision changes and the obligation to provide employee liability information come to fruition.
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