Employment Law update – The new TUPE regulations – Part 1
In this first of a series of blogs on the changes, I look briefly at the changes and consider their likely practical impact. In my later blogs, I will look in more detail at four of the changes.
The amendments are not as far-reaching as originally expected, e.g., the service provision change test remains despite the Government originally stating that it would be scrapped. The general consensus seems to be that the changes will be beneficial to employers. While I don’t disagree with that, I do think employers seeking to rely on some of them may be faced with a degree of uncertainty and a new set of challenges.
So, what are the key changes?
- The service provision change test has been amended to reflect current case law, so there will be a transfer only where the activities carried on post transfer are “fundamentally the same” as those carried on pre-transfer.
- Where a service provider proposes making redundancies after the transfer, it can begin collective redundancy consultation with the customer’s/ outgoing service provider’s employees before the transfer.
- The definition of an “economic, technical or organisational (ETO) reason entailing changes in the workforce” has been extended so that a change of location can now be an ETO reason.
- The restrictions on changing terms and conditions and carrying out dismissals have been varied with a view to giving employers more flexibility.
To my mind, these are the most significant changes and merit closer analysis. I will come back to each of them in my later blogs.
What of the other changes?
- Collective agreements – a service provider will be bound by the terms of the collective agreement in effect before the transfer date and will not be bound by any changes agreed by the customer/ outgoing service provider after the transfer date. This reflects the position under case law, so arguably there will be little change in practice.
- Where the transfer takes place on or after 1 May 2014, outgoing service providers/ customers must provide employee liability information at least 28 days (rather than 14 days) before the transfer occurs.
- Where there is a contract in place between the parties to an outsourcing, the provisions relating to the provision of employee data will usually be more onerous/ generous depending upon whether you are the party having to provide the information, or the party receiving it, so again, I expect this change to have little effect in practice.
From 31 July, employers with fewer than 10 employees (so-called Micro businesses) will be able to consult with employees directly rather than having to elect representative. While this is helpful, it is likely to have limited effect. It will not apply where the employer has 10 or more employees even if the number of transferring employees is less than 10. In that scenario, the obligation will still be to consult with employee representatives. However, where small numbers of employees are being transferred, I expect we will continue to see employers informing and consulting the affected employees directly. While this will technically be a breach, if the affected employees are given the chance to elect employee representatives at the outset then the risk of subsequent challenge is likely to be low.
In summary I consider that many of the changes are unlikely to make much difference for many service providers and their customers. In my next blog, I will look in more detail at one of the changes which is worthy of a closer look, namely, the amendment to the service provision change test, so there will be a transfer only where the activities carried on post transfer are “fundamentally the same” as those carried on pre-transfer.
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