Today, the government published its response to its consultation on amending the Transfer of Undertakings (Protection of Employment) Regulations. It is clear from the response that there has been a degree of re-thinking of some of the more controversial proposals trailed in our email update 132.
The headline announcement is that after all, Service Provision Changes are not to be abolished. This is likely to be welcomed in many quarters, as a return to the pre-2006 uncertainty over when TUPE applied in outsourcing situations was not an attractive prospect for those regularly involved in TUPE transfers.
The new legislation will also reinforce recent case law to the effect that a Service Provision Change does not occur where the incoming contractor’s service is not ‘fundamentally or essentially the same’ as the service provided before the transfer.
It is therefore likely that the Service Provision Change provisions of TUPE will continue to operate very similarly to the way they do at present once the regulations have been changed.
Other important changes to be aware of are:
The proposal to allow transferors to rely on a transferee’s ETO reason for dismissal is not going to be implemented.
The requirement upon a transferor to provide a transferee with Employee Liability Information is being retained, but will now have to be provided 28 days before the transfer unless special circumstances apply.
Employers employing 10 employees or less will be able to consult directly with its employees over a TUPE transfer rather than having to arrange for the election of workforce representatives where none are in place and there is no recognised trade union.
Terms derived from collective agreements can be renegotiated after one year has passed since the date of the transfer.
Changes to collective agreements to which the transferee is not a party will not be binding on the transferee post-transfer.
A change in employees’ place of work as a result of a relevant transfer will be capable in itself of being an ETO reason, providing a defence to unfair dismissal claims arising out of the change of the place of work. This will make it easier to fairly make redundant employees who do not want to transfer to the undertaking’s new location.
With the agreement of the transferor, it will be possible for the transferee to carry out collective redundancy consultation with employee representatives simultaneously with TUPE consultation, prior to the transfer.
Overall, these reforms can be viewed as positive and should make TUPE a little more workable for all who have to grapple with it. Both sides of industry will doubtless feel there are missed opportunities in the new proposals, but there is likely to be a good deal of consensus that most problematic aspects of the government’s original announcement have now been addressed.
It is currently expected that the new regulations will take effect from January 2014, although a longer lead in period may be allowed for any particular changes that warrant this.