The Government has issued a consultation paper suggesting a number of significant amendments to the business transfer regulations, TUPE. The most significant proposal is the possible removal of the "service provision change" rules, which were introduced in 2006 to clarify that outsourcings and insourcings would usually, although not inevitably, amount to TUPE transfers. Pre-2006 there had been confusion about when an outsourcing would amount to a TUPE transfer.

The overriding theme of this latest set of proposals is a move to strip back TUPE to the bare bones of what is required under the underlying Acquired Rights Directive.  Although the Government received a mixed response to its Call for Evidence last year about whether the introduction of the service provision change rules had business benefits, it nevertheless regards the rules as unnecessary "gold plating" and favours reverting to the position under the Directive.  This will mean a return to the old and complex case law on what constitutes a business transfer in outsourcings and other situations where there is a change of service provider.

On the same principle of removing so-called "gold-plating", other proposals include:

  • making it easier to change contracts of employment after a TUPE transfer  by providing that changes that are because of "the transfer itself" will be void, as opposed to the current situation where changes that are "connected with" the transfer may also be void.  It is not clear whether the proposed change will make much difference in practice – the Government accepts that, even with the amendments, changes purely for the purposes of harmonisation of terms and conditions of employment are unlikely to be possible
  • a change, along similar lines, to the rules on TUPE-related dismissals, so that dismissals connected to, rather than by reason of, the transfer, might not be automatically unfair
  • narrowing the scope of the current right to resign in response to a substantial change in working conditions to the material detriment of the employee
  • allowing a change of workplace location to be an "economic, technical or organisational reason entailing changes in the workforce".  As a result, dismissals for refusing to accept such a change following a transfer would not be automatically unfair.  The consultation also asks whether a transferor should be able to rely upon the transferee’s ETO reason in respect of pre-transfer dismissals, and
  • repealing the current 14 day rule for the provision of employee liability information to the transferee and replacing it with a requirement for the transferor to disclose information where it is necessary for the transferee and transferor to carry out their information and consultation duties.  But the Government has decided against introducing shared liability to replace the current rule that employment-related liabilities pass to the transferee.

The Government is planning to introduce at least some of the changes in October 2013; consultation closes on 11 April with a response to consultation due within 12 weeks.  The Government does however recognise that a "significant" lead-in time will be needed for the removal of the service provision change rules, although it is not at this stage clear how any transitional period will operate.