TUPE changes for transferees: what should we expect?

TUPE changes for transferees: what should we expect?

Published:

Author: Paula Rome

On 10 January 2014 the amendments to the TUPE Regulations were laid before Parliament. Although many of the proposed major changes have been diluted, the amendments may well provide new areas for debate.

Pre transfer negotiation

Transferees will be able to begin their consultations with employees for collective redundancies before the transfer. Since the time frame for collective consultation can be up to 45 days, this will be useful for transferees. However, it remains to be seen how this will work in practice since the transferor must agree to the transferee consulting with its employees pre transfer and can withdraw its consent at any time. Further, if the transferee encounters difficulties such as a lack of access to transferring employees or a general lack of cooperation from the transferor and cancels its pre-transfer consultation as a result, it will not be able to re-start the process. This is not the easy solution transferees might have hoped for.

Timing of employee liability information

Transferors will be required to provide employee liability information to transferees at least 28 days before the transfer in respect of transfers taking place on or after 1 May 2014. Although it is hoped that this will help reduce the risk for transferees of last minute or tactical provision of information, without any real enforcement provision there may be little impact. Further, for those preparing tenders, 28 days is still not long enough to be meaningful.

Changes to employment contracts

From one year after the transfer, transferees will be able to amend terms in the contracts of transferring employees where those terms have been negotiated by collective agreement. However, there is a condition attached that any amendments made are, when considered together, "no less favourable" to the employee. No indication of the meaning of "no less favourable" has been given, so this will be a potential point for litigation.

Where the employees' terms are negotiated by collective agreement, provided the transferee isn't involved in any further negotiations, the terms will be frozen as they stood at the date of transfer. This is useful for transferees as they will not be subject to changes in terms without their knowledge or negotiation.

Changes will also be allowed where they are permitted by the terms of the contract. However, European case law makes it clear that changes to contractual terms are void where the reason for the change is the transfer, and therefore it remains to be seen how this amendment will work in practice.

Changes in location

If there is a change in the location where work is carried out following the transfer, this will now count as a change in the workforce providing transferees with a permissible ETO reason for making employees redundant.

Micro-businesses to consult directly with employees

For transfers taking place on or after 31 July 2014 and where the employer has fewer than 10 employees, consultation can be done directly with individuals, provided that there are no existing employee representatives and a collective process has not been commenced.

It is likely that there will be considerable uncertainty over how areas of the amended legislation will operate until clarified by case law. Once clarified the changes may be helpful to transferees, by making TUPE processes more streamlined.