Various changes to the UK’s transfer of undertakings regime were introduced into the legislation in January 2014 but not all of them came into force immediately - the relaxation, for small employers, of the rules requiring consultation with employee representatives in advance of a TUPE transfer has now come into force.
The snappily titled Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 made various changes to the UK’s transfer of undertakings legislation - the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). One of these changes was to relax the obligation to consult with employee representatives insofar as they apply to small employers, described for the purposes of this legislation as “micro-businesses". These changes, which are designed to make life more straightforward for small employers, came into force on 31 July 2014 – the revised rules apply to TUPE transfers taking place on or after that date.
TUPE Information and Consultation Requirements
Prior to 31 July 2014, the position in respect of collective TUPE consultation was as follows - and this remains the position in relation to employers who are not micro-businesses. In advance of a TUPE transfer an employee must provide to “appropriate representatives” specified information about the transfer such as the fact, reason and timing of the transfer, its “legal social and economic implications" and any “measures”, such as dismissals or changes to terms and conditions of employment, which either the current or new employer envisages taking in relation to the transfer. If measures are envisaged there is an obligation to consult with those appropriate representatives with a view to seeking agreement about the measures envisaged. Failure to comply with these information and consultation obligations can have serious consequences as the penalty for failure to comply is up to 13 weeks’ pay per affected employee. Awards for breach can therefore be significant.
Appropriate representatives for these purposes will be a recognised trade union if there is one - and if there is such a recognised union this is the body which the employer must deal with. In the absence of a recognised trade union then the employer must deal with “employee representatives” who can either be a standing body of representatives whose competence extends to TUPE matters in terms of the purposes for and method by which they were appointed or representatives elected specifically for the purpose. There are detailed rules governing how such an election is to be conducted if representatives are to be valid for these purposes.
These information and consultation requirements can entail considerable management time and effort and the 2014 changes relaxed the obligations for those employers which employ fewer than ten employees and do not already have existing employee representatives in place (by way of a recognised trade union or other elected or appointed representatives). These so-called micro-businesses are now excused from the obligation to invite the employees affected by a TUPE transfer to elect representatives for the purposes of the collective information and consultation process required by TUPE. The employer can satisfy its obligations simply by dealing direct with the employees.
Importantly, this change does not relieve a micro-business of the obligations to provide the relevant information pre-transfer and to conduct consultation if “measures” are planned. Nonetheless it does simplify the consultation process and reduce the risk of awards for breach of the technical requirements of the TUPE information and consultation regime in relation to who the employer needs to deal with to ensure compliance. Also, whilst this change reduces “red tape”, it does not reduce the value of planning the communication process around a TUPE transfer carefully to ensure compliance with the applicable information and consultation obligations and to ensure that the transfer process proceeds as smoothly as possible in HR management terms. An audit trail to ensure that the employer can demonstrate its compliance with the applicable TUPE requirements can be crucial, especially if the direct dealings with staff are to be relatively informal now that micro-businesses do not need to elect representatives for TUPE purposes, and a careful communication strategy can avoid the transition process going off the rails