As of 1 January 2014 there will be some small but important changes to TUPE. Employers who are planning on undertaking TUPE transfers in the near future may wish to consider whether or not to delay implementation to take advantage of the changes coming into effect at the start of next year.
As we know, even after its reform in 2006, TUPE can still be a thorn in the side of those trying to do commercial deals, whether acquisitions or outsourcings. Because of this, the UK Government said that it would review it again and make it more user-friendly (again).
They kept us interested by promising some sweeping changes, but the final proposals were published recently and they aren’t quite as exciting as they could have been. There is some cause for celebration, however, as a few thorny TUPE issues do look as though they are going to be addressed with effect from 1 January 2014.
What Do You Need To Know?
Relocations will now be allowed
Currently if, following a TUPE transfer, the buyer of a business wants the employees of that business to relocate to its existing premises, the dismissal of any employee during the process risks being automatically unfair. This can cause the purchaser a real headache.
This is set to change. Such relocation dismissals will no longer be automatically unfair, although employers will still need to follow the usual procedures to avoid standard unfairness.
Pre-transfer TUPE and redundancy collective consultation processes may be done at the same time
At the moment, if a purchaser wants to make redundancies from among the transferring employees, it should probably wait and carry out that redundancy process after the transfer. If 20 or more redundancies are proposed, that can mean another 30 or 45 days of collective consultation before those dismissals can take effect.
Because that is commercially unpalatable, parties have tended to do the collective redundancy consultation pre-transfer, at the same time as the TUPE consultation. But it has always been uncertain whether that works and the issue has not been decided by a tribunal.
There will now be some clarity around this. Simultaneous pre-transfer redundancy and TUPE consultations will be allowed, as long as the current employer agrees to the “new” employer doing it and the new employer carries out meaningful consultation. The Government needs to think through some complexities about how this will work in practice, but we are told that the change will be accompanied by detailed guidance.
Small employers (with less than 10 employees)
Small employers won’t have to elect representatives, although big employers will still have to, even where there are fewer than 10 employees to transfer.
It will be easier to harmonise where collective agreements are in place
Employers will be able to re-negotiate terms that stem from collective agreements one year after the transfer, as long as the overall package offered to the transferring employees is not less favourable. Outside this change, “harmonisation” will still no doubt be considered a dirty word by Employment Tribunals.
What is not going to change
Proposals to remove service provision changes from the scope of TUPE were scrapped after a negative response during the consultation. This means that (perhaps unsurprisingly) “outsourcings” will continue to be caught by TUPE.
Despite the more relaxed approach to harmonisation in relation to collective agreements, a broader loosening of the rules limiting the circumstances under which changes may be made to terms and conditions was not followed through.
What Does This Mean For Employers?
The changes to TUPE didn’t go as far as employers had hoped. Nonetheless, they should be welcomed as providing greater flexibility for business re-organisations following TUPE transfers.
Employers who are planning on undertaking TUPE transfers in the near future may wish to consider whether or not to delay implementation (if possible) to take advantage of the changes coming into effect on 1 January 2014. We will keep you posted on how implementation progresses, and if it looks as though there will be a delay we will let you know.