On 31 January 2014 changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 will be made by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014. It has been a long process to get here and we have set out some points to be aware of below. Should you have any questions around the changes, please do not hesitate to contact a member of our employment team.
Service Provision Changes
The new regulations set out a government u-turn on service provision changes – what was initially demonised by the government as undesirable “gold-plating” of an EU Directive has now been called “an example of where good regulation, that is additional to that required by a European Directive, can deliver benefits for both business and individuals”. The result being that the service provision rules remain largely unchanged except that it is now explicit that there will only be a service provision change where the activities carried out are fundamentally the same after the transfer.
Ability to Change Terms and Conditions
Under the old rules changes to terms and conditions of employment, even with the agreement of employees, are void if the reason for the change is the transfer. If the reason for the change is connected to the transfer the change is not void if it is for an ETO reason (an economic, technical or organisational reason involving changes in the workforce).
Under the new rules changes to terms and conditions with the consent of employees are only void if the sole or principal reason for them is the transfer and even then they are valid if there is an ETO reason. In addition, the new rules make it explicit that a change of location is an ETO reason so if the transferee needs to move employees to a new location and the employees agree to this the change in terms will be valid. There is, however, an issue as to whether an employee could still resign and bring a claim on the basis that the change in terms is a substantial change in working conditions to their detriment: a problem which was flagged up to the government in consultations but which they declined to resolve.
In summary, variations to terms will in future be possible where:
- The transfer is not the sole or principal reason for the change;
- There is an ETO reason for the change and the employees agree to it; and
- The change is one which the employer is entitled to make under the existing contractual terms.
Protection against Dismissal
Under the old regime a dismissal was unfair if the sole or principal reason was the transfer or if the dismissal was in connection with the transfer but not for an ETO reason (see above). Under the new regime a dismissal will be fair if the sole or principal reason for the dismissal is the transfer but there is an ETO reason. The tweak in the wording will result in litigation as there is considerable uncertainty as to whether it changes the current position but in our view, until when and if case law establishes otherwise, it is wise to view this change with caution.
Employee Liability Information
Under the old rules information about transferring employees only had to be provided to the new employer 14 days before the transfer took place. Businesses involved in tendering made it clear that employee liability information could be very useful but that it needed to be provided earlier. As a result this information now needs to be provided 28 days in advance of the transfer.
Pre-transfer Collective Consultation
Under the old regime collective consultation about dismissals via employee representatives could only take place after the transfer. The new regulations allow a transferee to elect to consult with employee representatives before the transfer. A transferee can change its mind once and decide not to consult before the transfer. A practical difficultly in carrying out the pre transfer consultation is that the transferor does not have to provide assistance – this could create practical problems about access to employee representatives, timing of holding meetings, providing information and location of meetings. In practice, pre-transfer collective consultation is not likely to work unless the transferor co-operates with the transferee.
Exception for Micro Businesses
Following the Government’s general approach, micro businesses (defined as those with fewer than 10 employees) benefit from a relaxation of some of the requirements. In the case of TUPE it permits micro businesses to inform and consult directly with employees where there are no existing representatives thereby avoiding the need to go through the election process.
The new regulations set out a number of changes, those most likely to have a practical impact are the ability to change an employee’s place of work without causing an automatically unfair dismissal and the ability to start collective consultation on redundancies pre-transfer.