When a business changes owner, its employees may be protected under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). TUPE protections make sure that employees don’t unfairly lose out when a transfer takes place, and set out the rules that the old and new businesses have to follow.
In a response to a consultation on TUPE regulations earlier this year, the government is announcing that the laws will be improved to make sure both employers and staff are treated fairly when a transfer takes place.
Employment Relations Minister Jo Swinson said: “TUPE rules are essential to making sure that when a business is transferred from one company to another, it happens in a fair and efficient way. There have been some areas of the law which created uncertainty and confusion for businesses trying to comply with the law.
“By making these changes we will clear out the cobwebs in some of the rules which will give businesses more clarity about conducting transfers. As part of the Red Tape Challenge we are reforming these rules, keeping in place the necessary protections for employees and helping support a stronger economy.”
In its response the government has confirmed that:
Businesses will be able to renegotiate terms and conditions provided for in collective agreements one year after the transfer provided that overall the change is no less favourable.
TUPE protects employees’ terms and conditions and does not generally allow them to be changed by reason of the transfer. However, as an exception, the Acquired Rights Directive (which TUPE implements) gives scope for changes to terms and conditions, which are set out in collective agreements, from one year after the transfer.
It will make clear that where employees have terms and conditions provided for in collective agreements, only the terms and conditions in the collective agreement existing at the time of the transfer will apply to the employment with the new employer. Later changes to the collective agreement won’t bind the new employer if it is neither a party to the subsequent collective agreements, nor takes part in the process for bargaining them.It will not repeal the service provision change rules. These rules mean that TUPE will usually apply to the change in the provision of a service, such as security guarding services for a business, where there is a group dedicated to the service for the client.
The rules protect service sector workers, as they are more likely to move with the work during a change. Employees will continue to be protected as they have been.
It will provide clarification of the rules on service provision changes. The government will set out part of the test which determines whether there has been a service provision change. For a change to have happened, the activities carried on after the change must be ‘fundamentally or essentially the same’ as those carried on before it. This means that if businesses radically change the way they provide services, that change is unlikely to be caught by the TUPE regulations.It will amend the rules so that where the place of work changes after the transfer, any redundancies due to that change will not be automatically unfair. This means that as a starting point businesses will not face possible unfair dismissal claims simply because of a change in location of the workplace.That it will allow micro businesses to inform and consult employees directly when there is no recognised trade union or other existing representatives. At present when a business transfer takes place, under TUPE regulations businesses usually have to inform, and sometimes also consult, employee representatives such as trade unions representatives. For micro businesses of ten or fewer employees, there are often no representatives which means that they have to be elected. This change will make this process much less bureaucratic.
The changes outlined will remove unnecessary gold plating to EU Law and reduce red tape. They will remove unfair legal risks from businesses and thereby increase their confidence and competitiveness without the shadow of legal worries hanging over them.
Simpler, more flexible employment laws will make it easier for companies to hire and manage staff, while protecting basic workers’ rights. This should encourage employers to create new jobs, supporting enterprise and growth.