The Government has now published its response to the consultation into reform of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”).

The consultation was part of the Government’s Parliament-long “Employment Law Review” which, in relation to TUPE, had the stated aim to ensure that TUPE does not reduce the flexibility, effectiveness or fairness of the labour market.  The consultation received 178 responses from individuals, employee representatives and businesses, including from CMS.

In a move that was not widely expected, the Government has been persuaded not to change some aspects of the TUPE Regulations as initially proposed. In particular, the Government will not:

  • repeal service provision changes (“SPC”), the category of transfer introduced in 2006, although its scope will be clarified in light of recent case law (see below).  This is consistent with the recommendation made in the CMS response;
  • allow a transferor to rely on a transferee’s economic, technical or organisations reasons to dismiss an employee prior to transfer;
  • amend the “substantial detriment” provisions contained in Regulation 4(9); and
  • remove the rules around employee liability information, but will extend the minimum time period for compliance to 28 days prior to the transfer.

However the Government believes the following changes will improve the operation of TUPE and has indicated they will proceed:

  • terms of employment derived from collective agreements which have transferred will be permitted to be renegotiated from one year post-transfer, as long as the changes are no less favourable to employees;
  • terms of employment derived from collective agreements will “crystallise” at transfer such that any future amendments agreed between a trade union and the transferor will not impact on the transferee’s inherited agreement (implementing the “static” approach favoured by the CJEU earlier this year in Alemo-Herron v Parkwood);
  • changes in the location of the workforce post-transfer may be classed as economic, technical or organisational reason entailing a change in the workforce, thus allowing them to be classed as redundancy, and not automatically unfair;
  • an SPC will be redefined to make clear that post-transfer activities would need to be “fundamentally or essentially the same” in order to constitute an SPC;
  • “micro-businesses” (fewer than 10 employees) will be permitted to inform and consult directly with transferring employees where there is no trade union or existing employee representatives; and
  • consultation by a transferee with transferring employees pre-transfer will be able to count towards collective consultation for redundancy requirements.

You can read the full response to the consultation here.  It is the Government’s intention that the new TUPE Regulations will be laid before Parliament in December 2013.

Comment

While the draft regulations are not yet available, the substance of the Government response has been unexpected in many respects, in particular in relation to the u-turn on SPC transfers.  Additionally some of the other changes noted above should provide greater certainty for businesses in dealing with TUPE transfers, and are generally being welcomed by the employment and business community.