The surprising news revealed by today’s response to consultation is that service provision changes are here to stay. Even though this second limb of the definition of a TUPE transfer, first introduced in 2006, goes beyond the requirements of the Directive, the government has been persuaded that this is an example of “good regulation” and should stay.
That’s not to say that TUPE’s service provision rules will remain completely untouched. One potentially significant change is to include an express requirement that the service remains “fundamentally or essentially the same” in order remain within scope. We will have to see the actual wording proposed to make a final assessment, but this change is likely to be broadly in line with existing case law on the point.
There will be a number of other changes that will apply to both species of TUPE transfer – ie the “classic” business transfer as well as the newer service provision change. We have picked out three which we think are particularly significant.
The most topical is an amendment concerning collectively agreed terms, which reflects the room for manoeuvre created by the recent decision of the European Court of Justice in Alemo-Herron. The TUPE regulations will be amended to stipulate a “static” approach to collectively agreed terms. That will mean that only those terms agreed at the date of the transfer will bind the transferee: transferred employees will not have the benefit of terms agreed after the transfer as part of the pre-transfer collective bargaining machinery.
Another important change will be to widen the scope of the “ETO” defence, which prevents a transfer-related dismissal being automatically unfair when it is for an “economic, technical or organisational reason entailing changes in the workforce”. Under current case law, a change in the location of the workforce alone can not count as an ETO reason, which means that transferees can be exposed to claims for automatically unfair dismissal where transferred workers cannot relocate. The Government will amend the definition of an ETO reason to make it clear that it covers changes in location as well as other workforce changes.
Finally the rules on collective redundancy consultation will be amended to allow a transferee to start consultation prior to the transfer with the co-operation of the transferor. This often happens informally in any event, but technically does not count towards the minimum consultation period. That’s because, as things stand, consultation can only be initiated by the current employer. Consultation by a prospective employer doesn’t count. However the rule that prevents a transferor from adopting a transferee’s reason for dismissing will stay. So it will still not be possible to dismiss fairly before the transfer in anticipation of post-transfer redundancies.
This and much more will be contained in regulations the government promises will be laid before Parliament in December. We can therefore expect the new regime to take effect early in the New Year.