TUPE – Government response to consultation

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In early September, the Government issued its response to consultation on TUPE.

The once threatened ‘service provision change’ rule has been given a reprieve and will not be abolished. This is welcome news, as it avoids a return to the pre-2006 legal uncertainty as to whether or not a service provision change fell within TUPE. The TUPE regulations will be amended to confirm that for there to be a TUPE service provision change, the activities carried on after the change in service provision must be “fundamentally or essentially the same” as those carried on before it (this basically confirms the position that has been well established by case law so has little impact in practice).

The rules on employee liability information will also be retained and the timescale for provision of this information will be extended from 14 to 28 days pre-transfer. This is still likely to be too close for comfort for most transferees and we envisage that many will request a longer period in the commercial heads of terms. In the case of second and subsequent generation outsourcing, tendering contractors will want to establish what timescale the customer negotiated with the incumbent contractor.

In addition, the Government’s response confirms that TUPE will be amended as follows:

To allow transferees to re-negotiate terms of employment derived from collective agreements one year after the transfer even though the reason for seeking to change them is the transfer, provided that overall the change is no less favourable to the employee. It goes without saying that much legal wrangling is anticipated over the question of whether changes are ‘no less favourable’!
To provide expressly for a ‘static’ approach to the transfer of terms derived from collective agreements (i.e. the transferee will not be bound by collectively agreed terms post transfer if it is not able to be involved in the negotiating process). This confirms the approach of the ECJ in the recent case of Alemo-Herron and others v Parkwood Leisure Ltd on which we reported in our July employment briefing.
To provide that changes in the location of the workforce following a transfer can be within the scope of economic, technical or organisational (ETO) reason entailing changes in the workforce, thereby preventing genuine place of work redundancies from being automatically unfair. The logistical issue will still arise as to how transferees will manage a consultation process with employees located some distance away.
On the point of redundancy consultation, the Government will amend the Trade Union and Labour Relations (Consolidation) Act 1992 to make it clear that TUPE consultation which begins pre-transfer can count for the purposes of complying with the collective redundancy rules, provided that the transferor and transferee agree and where the transferee has carried out meaningful consultation. This is a common-sense move and will be welcome news for HR practitioners as it will help to smooth the consultation process for all involved where redundancies are envisaged post-transfer.

The draft regulations are expected to be published in December 2013 and brought into force in January 2014.