7 May 2013

In March we asked HR Law readers for their views on some of the most important changes to TUPE being proposed by the Government. The feedback we received formed part of our response to the Government’s consultation. Generally, readers’ views did not surprise us. A majority was opposed to scrapping employee liability information requirements and most thought that the proposed changes relating to dismissals and redundancies were a good idea. What did surprise us was that a small majority were in favour of scrapping the service provision change provisions and returning to the previous, pre-2006 situation where the application of TUPE to outsourcings and changes in service provider depended on all the circumstances. Perhaps these readers did not have the misfortune to have to grapple with these issues before 2006. Given the additional comments we received on this point, it is clearly a matter on which opinion is divided. We shall let readers know when the changes are finalised. In the meantime, please see the results of the survey below.

1) TUPE 2006 introduced the concept of a “service provision change” to remove the uncertainty which had existed over whether or not outsourcings and changes in service providers were caught by TUPE. The Government’s view is that it is not clear that the intended benefits of this change are being realised.

The Government’s proposal is to scrap the concept of “service provision change” and to revert back to the previous situation where the question of whether outsourcings and changes in service provider were caught by TUPE depended upon all the circumstances.

  • Do you agree that the service provision change provisions in TUPE should be scrapped and there should be a return to the previous situation?Yes: 59.3%
    No: 40.7%
    “Even the judges were finding it impssible to make judgements which were not conflicting before the 2006 regs and were complaining outwardly about it. Although far from perfect the situation as we have it is better than the situation was”

    “Pre 2006 there was a great deal of argument over whether or not TUPE applied. This was especially prevalent in changing suppliers (what is now the SPC). A return to this will mark a returnt to the protracred arguments over the application of TUPE, which in turn leads to increased uncertainty for both employers and employees.”

    “I think the current concept is clear”

2) The Government considers that the obligation on transferors to provide certain information to transferees about transferring employees (“employee liability information”) at least 14 days before the transfer should be scrapped and that the exchange of information should be a matter for the transferor and the transferee to sort out between themselves, with the Government simply providing guidance on the matter.

  • Do you agree that the employee liability information requirements should be scrapped?Yes: 34.6%
    No: 65.4%
    “I think the law should provide for early information transfer. With TUPE there is a lot of work to do which cannot be managed adequately in 14 days. Time could be numbers related. i.e. if 100 employers transferring 1 month necessary”

    “The 14 days doesn’t work – especially when the client wants a transfer to happen in a shorter period than that. But in general I?think that some kind of timeline is appropriate because in all likelihood the transferor and transferee won’t sort it out between themselves because only one party has an incentive to do so”

    “To a degree there still needs to be some governance over the transfer of data to avoid less scrupulous employers ‘stitching up’ incoming providers”

    “The period should be extended if anything”

    “Requires more than 14 days prior notice to be of any use”

    “It’s hard enough to obtain the information with an obligation of 14 days, if there is nothing in place then it could all slip”

3) The protection provided by TUPE does not prevent dismissals for “economic, technical or organisational reasons entailing changes in the workforce”. However, the words “entailing changes in the workforce” have been interpreted narrowly by the courts meaning that it does not cover a situation where there is a reduced need for employees to do work of a particular kind but there is no change in the overall numbers of the workforce at the place of work, e.g. because other areas are growing at the same time. This means that a dismissal which would have been capable of being fair for unfair dismissal purposes had there not been a transfer, is no longer capable of being fair. The Government plans to rectify this and so align the meaning of the words with the definition of redundancy under the Employment Rights Act.

  • Do you agree that “entailing changes in the workforce” should be extended so that it covers all the different types of redundancies in the Employment Rights Act?Yes: 92.3%
    No: 7.7%
    “Currently it is too vague with no clear guidnace or examples on what ETO reasons are.“

    “I think that the same terminology should be used in all the Acts and not mean different things”

4) At present, a transferor cannot, in relation to dismissals it carries out before the transfer, rely on an economic, technical or organisational reason of the transferee for the dismissals. This can lead to employees being kept in employment by the transferor and transferring to the transferee only to be made redundant on their first day or shortly afterwards.

  • Do you think that transferors should be able to rely on transferees’ economic technical or organisational reasons in relation to dismissals they carry out before the transfer? Yes: 76%
    No: 24%?
    “It would be helpful if a redundancy process could start before the transfer. It is more an issue if there are large numbers involved and the longer consultation invoked. The transferee should only be allowed to start the consultation process with employees who are not yet their employees in this circumstance.”

    “I needed an ‘undecided’ button here. Yes, it’s a good idea on a common sense basis but I think it will just force redundancy costs onto the transferor more often”

    “I think this would clarify the position earlier for transferring employees. Uncertainty can sometimes be the worse thing.”

5) The Government intends to amend TUPE to make it clear that consultation by transferees with transferring staff before the transfer can count towards collective redundancy consultation requirements.

  • Should TUPE be amended to make it clear that consultation by transferees with transferring staff before transfer can count for the purposes of the obligation to consult on collective redundancies?Yes: 80%
    No: 20%
    “Some employers will exploit this”

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