The Government consulted on reforming the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) earlier this year. Yesterday the Government published its response.

An important change that will not be implemented is to repeal the service provision change (“SPC”) provisions of TUPE.  The Government’s decision not to remove the SPC provisions is based on the belief that by removing the rules it would create significant uncertainty for businesses, individuals and the economy.  In reaching this decision the Government noted some of the arguments against repeal including how it could increase the price of bidding for contracts, cause ruinous liabilities for existing incumbent contractors and increased litigation.

The main changes to TUPE will be to:

  • allow the renegotiation of terms from collective agreements one year after the transfer, with the condition that the changes are no less favourable to employees;
  • clarify that for TUPE to apply to a service provision change the service provision must be "fundamentally or essentially the same"  before and after the transfer;
  • allow the change to the location of a workforce to be within the scope of an economic, technical or organisational reason entailing changes in the workforce (this will mean that any employee who is dismissed in these circumstances will not be automatically unfairly dismissed (although they could still claim ordinary unfair dismissal if the appropriate dismissal procedure was not followed));
  • allow businesses with fewer than 10 employees (micro businesses) to inform and consult with their employees directly regarding the transfer (rather than through employee representatives); and
  • allow (in some circumstances) pre- transfer consultation by the transferee to count for  collective redundancy purposes.

The Government also decided not to remove the transferor`s obligation to provide employee liability information.  The time for providing such information has instead been increased to 28 days.