Changes to the TUPE regulations and the collective redundancies regime came into force on 31 January 2014. Following our alert on 30 January, hrlaw@foxwilliams now takes a closer look at the key changes.
1. Collective redundancy consultation before a TUPE transfer is now possible.
- Where a TUPE transfer is going to take place and the transferee proposes making collective redundancies afterwards, the transferee can consult representatives of those employees before the transfer so long it notifies the transferor in writing and the transferor agrees.
- A number of organisations were already doing this in practice but the legal status of such consultation has now been made clear.
- However, there is still no obligation on a transferor to agree to let the transferee carry out such consultation. Even if the transferor does agree, it is not obliged to help the transferee or provide any information (other than the usual employee liability information) to help it meet the transferee obligations.
- In an outsourcing scenario, an outgoing service provider may not be prepared to co-operate with an incoming rival service provider unless it has a contractual obligation to its client to do so.
2. The circumstances in which dismissals are automatically unfair under TUPE are now more limited.
- The provision which rendered dismissals automatically unfair if they were for “a reason connected with the transfer” has been scrapped. The rule now is that dismissals will be automatically unfair only if the sole or principal reason for them is the TUPE transfer.
- There is an exception to this rule if the reason is an “economic, technical or organisational reason entailing changes in the workforce”. “Changes in the workforce” now includes a change in the place of work. This means that dismissals arising out of a workplace relocation following a TUPE transfer will not be automatically unfair.
3. Changing terms and conditions of employment.
- The provision which rendered void any changes to terms and conditions of employment for “a reason connected with the transfer” has been scrapped. The rule now is that changes will only be void if the sole or principal reason for them is the transfer.
- This rule does not prevent:
a.) a change if the sole or principal reason for the change is an “economic, technical or organisational reason entailing changes in the workforce” (which now includes a change in the place of work) – if the employer and employee agree the change; or
b.) changes permitted by the contract (for example a change in the place of work). However, these new rules do not expressly address the interaction between this provision and the “deemed dismissal” provision in Regulation 4(9) of TUPE under which an employee can treat his employment as having been terminated where a transfer involves a substantial change in working conditions to his material detriment.
4. Changes to terms and conditions of employment derived from collective agreements will be possible.
- Such changes will be possible if they take effect more than a year after the transfer, provided that the rights and obligations in the employee’s contract, when considered together, are no less favourable than before the change. This applies to transfers which take place on or after 31 January 2014.
5. Future changes to collective agreements will not affect transferees if they are not involved in agreeing those changes.
- Where employment contracts of transferred employees incorporate the provisions of collective agreements agreed from time to time, future changes to those collective agreements will not apply to transferees if they are not involved in agreeing those changes. This change implements the landmark decision on this point by the Court of Justice of the European Union.
6. For there to be a service provision change under TUPE, the post-transfer activities must be “fundamentally the same” as the activities carried out by the person who previously carried them out.
- The intention behind this new wording is simply to codify the case law position. Whether activities are “fundamentally the same” will turn on the facts of each case.
- Service providers should be mindful that there may not be a TUPE transfer at the end of their contracts and so they may not be able to off-load employees to the new service provider. They should deal with this possibility in their agreements with clients and/or factor the uncertainty when pricing the service.
7. The deadline for providing employee liability information will be earlier.
- For transfers on or after 1 May 2014, the deadline by which transferors must provide transferees with employment liability information in respect of the transferring employees will be 28 days before the transfer (an increase from the current 14 days).
8. Micro-businesses will be able to consult directly with employees.
- For transfers taking place on or after 31 July 2014, employers with 9 or fewer employees will be able to comply with their information and consultation obligations under TUPE by informing and consulting with staff directly rather than through representatives, subject to certain conditions.