On 17 January 2013 the Government published its consultation on proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). The Government proposes that the resulting framework should not go beyond the minimum requirements of the European Acquired Rights Directive (ARD), without unnecessary gold-plating.

The consultation document is available from the BIS website, which follows a Call for Evidence on TUPE related matters. The consultation period will end on 11 April 2013 and among the many proposals, the Government seeks views on the following:

1. Service provision change

The Government view is that the TUPE Regulations on service provision change impose unnecessary burdens on businesses and it proposes the repeal of service provision change. Whilst this aspect of the Regulations was introduced to give clarity on outsourcing, insourcing and transfer of service contracts the Government considers the rules to be uncompetitive and takes the view that they go further than the requirement of the ARD. However, repealing service provision change rules would reverse the current law and take us back to 1981 provisions and European case law, leaving scope for uncertainty again.

2. Employee liability information

The requirement for employee liability information to be disclosed at least 14 days before a transfer is expected to be repealed and replaced with an obligation that the parties disclose information necessary for the parties to comply with their duties under TUPE, leaving the parties to resolve disclosure of information between them.

3. Changes to terms and conditions

Currently, any changes to terms and conditions of employment connected with a transfer are void and unenforceable, even if the transferor and transferring employee would agree to a change, unless the reason for the change is an economic, technical or organisational reason entailing changes in the workforce (ETO). The Government recognises the undesirable effect this has in creating a two-tier workforce and proposes amendments to the restriction on changing terms and conditions to reflect more closely the provisions of the ARD, allowing employment contracts to be amended post-transfer.

4. Economic, technical or organisational reasons for dismissal

It is proposed that the definition of ETO be widened to include changes to the workforce location. This will align ETO under TUPE with the definition of redundancy for the purposes of unfair dismissal. Changes to the place of work following a transfer will therefore not automatically be unfair.

The Government is also seeking views on whether a transferor can legally rely on the transferee’s ETO to legitimise pre-transfer dismissals. This will be particularly welcomed by administrators selling insolvent businesses and where a place of work redundancy is inevitable immediately post-transfer.

5. Protection against dismissal

Regulation 7 protects against dismissal where the sole purpose or reason is the transfer itself or is connected with a transfer. This latter reason goes further than required by the ARD and the Government seeks to align regulation 7 with the ARD.

6. Collective redundancy and interaction with TUPE

The Government is considering whether to enable pre-transfer consultation under TUPE to count towards collective redundancies.

Whilst implementation of some of the proposals is likely to simplify the rules on TUPE and ease the burden on businesses, such implementation would inevitably lead to new legal challenges, particularly for outsourcing situations and whether or not it involves a transfer of an undertaking. The Government has indicated that any changes are likely to take effect from October 2013. However, there will be transitional provisions including a “significant lead-in period” for the repeal of service provision changes.