• 30 January 2014

TUPE - summary of the changes made in 2014

On 31 January 2014, The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (“the Regulations”) come into force. Despite the Government’s claim that the amendments will provide greater certainty and simplify the existing law relating to transfers, the practical effects of the Regulations are not as far-reaching as had been anticipated. Significantly, the proposed abolition of Service Provision Changes has not materialised, and the amendments provided for are relatively minor in nature. This article will briefly highlight the main ways in which the Regulations have amended the Transfer of Undertakings (Protection of Employment) Regulations 2006.

In brief, the Regulations provide:

-          A clarification of the 2006 Regulations regarding the test for service provision changes. In short, for there to be a Service Provision Change within the meaning of the 2006 Regulations, the activities being carried out by the transferee must be “fundamentally the same” as those carried out by the transferor before the transfer.

-          Amendments to the provisions conferring protection to transferring employees against variation of contract. The Regulations retain the existing principle that any variation of a contract of employment will be void if the reason for the variation is the transfer. However, contractual variations will now be permissible in the following circumstances:

  • If the reason for the variation is an economic, technical or organisational reason entailing changes in the workforce. However, the Regulations now provide that the employer and employee must agree to the variation. It is accordingly no longer sufficient to rely solely on an economic, technical or organisational reason entailing changes in the workplace in the absence of agreement between employer and employee to the proposed variation(s) made.
  • If the contract of employment allows the variation in question. It is, however, unclear at this early stage whether any changes which are to the material detriment of the employee - even where the contract of employment expressly allows such changes to be made - will allow the employee to make a claim for constructive unfair dismissal under Regulations 4(9) or 4(11) of the 2006 Regulations. It is likely that despite the uncertainty in the language used in the Regulations, a claim of constructive dismissal would remain open to transferring employees if detrimental variations were to be made to their contracts of employment.

-          In the case of collective agreements, the Regulations provide that: 

  • Variations to such agreements will be permissible where the changes in question take place more than one year after the transfer and the new term is “no less favourable” to the employee.
  • A transferee will not be bound by any provision of a collective agreement agreed after the date of the transfer in circumstances where the transferee was not a participant in the collective bargaining for the provision in question. 

-          In relation to both variations of contract and dismissals for an economic, technical or organisational reason entailing changes in the workforce, the Regulations now expressly provide that the phrase “changes in the workforce” includes a change to the place where employees are employed to work. One practical effect of this change is to ensure that genuine “place of work” redundancies are not deemed as being automatically unfair. 

-          The period by which a transferor must supply employee liability information will now be increased from “not less than 14 days before the relevant transfer” to “not less than 28 days before the relevant transfer. 

-          Micro-businesses (business with fewer than ten employees) will be able to inform and consult directly with any affected employees where there are no appropriate representatives. 

-          The Trade Union and Labour Relations (Consolidation) Act 1992 is amended to provide that in circumstances where the transferee is proposing to dismiss as redundant more than 20 transferring employees within a period of 90 days or less, the transferee now has the option of earlier consultation. The Regulations allow the transferee to consult affected transferring employees before the transfer takes place, however, this is only if:

  • The transferor agrees to such pre-transfer consultation; and
  • The transferee gives written notice of such consultation to the transferor.

It is important to note, however, that if the transferee decides to end the consultation early, it is not possible to recommence the consultation process before the transfer takes place. Further, despite the provision that the transferor must agree to pre-transfer consultation by the transferee, the Regulations place no obligation on the transferor to furnish any information or assistance to the transferee, and any failure by the transferor to do so will be no defence to a claim by an employee for failure to inform or consult.

In conclusion, as can be seen from the above, the amendments made are not as significant as the Government had originally proposed, and the effects on business should be minimal. A guide to the Regulations has now been published by the Department for Business Innovation and Skills, aimed at employees, employers and representatives and can be found on the website.