Greater Flexibility under TUPE from 31 January 2014

The final version of the amendments to the TUPE regulations has been laid before Parliament, and changes to TUPE will take effect from 31 January 2014. The TUPE regulations protect the employment of employees who are affected by the acquisition of one business by another, or by a change in service provider in an outsourcing arrangement. Amendments to the existing regulations are being introduced following a consultation on the operation of TUPE, with the aim of simplifying the legislation and removing gold-plating. Key changes that will impact businesses are:

  • Potentially fair redundancies: Redundancies due to relocation of the workforce following a transfer will not be automatically unfair, making them easier and cheaper to implement.
  • Pre-transfer redundancy consultation: Purchasers/transferees will be able to engage in pre-transfer collective redundancy consultation with the seller/transferor’s employees if the seller/transferor consents. Where post-transfer redundancies are anticipated, this should allow for greater certainty for all affected by the transfer, although there are circumstances where transferors may be reluctant to consent, for example, where there is a concern that the transfer may not ultimately go ahead, or  where an incoming service provider is a competitor of the transferor.
  • Some expanded scope to vary contractual terms: Purchasers/transferees will have some expanded scope to vary contractual terms post-transfer, and, it will be possible to change terms derived from collective bargaining agreements, provided one year has lapsed since the transfer and the changes are no less favourable to employees.
  • Earlier provision of employee liability information: Employee liability information (that is information about transferring employees) is to be provided by the seller/transferor earlier in the process. Currently this must be provided 14 days before a transfer, but for transfers from 1 May 2014, it must be provided at least 28 days in advance.
  • Clarity on definition of service provision changes: Service provision changes will expressly remain in scope of TUPE, but the regulations will clarify that TUPE only applies where the activities carried on after the change are “fundamentally or essentially the same” as the activities carried on before. This reflects developments in case law, which have seen a recent tendency towards a narrower interpretation of TUPE, although it is doubtful that the amendment will make a significant difference in practice.
  • Static approach to contractual terms derived from collective agreements: Purchasers/transferees will no longer be bound by future changes to contractual terms derived from collective agreements.

Jean Lovett, Linklaters Employment Partner, said;

“The amendments to the TUPE regulations are not ground breaking, but employers will welcome the changes including to redundancies arising from a TUPE-related relocation and clarification of how collective bargaining mechanisms are affected by a TUPE transfer.”

Jean Lovett is available for interview.  If you would like to speak to her, either for background on the issue, or further commentary, please contact Rupert Winlaw, on 020 7456 3219.