TUPE regulations are in line for refinement, but not fundamental change, which is a good thing
On 5 September the Government announced proposals for changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (better known as TUPE). These regulations and their predecessors – the 1981 regulations with the same name – have been the cause of much litigation and cost to employers since they were introduced. However, as they were created to give effect to a European directive, the government of the day, and the current one, have had little room for manoeuvre.
The 2006 version introduced a new type of transfer to which TUPE applied, namely the “service provision change” (SPC). This was designed to extend the scope of TUPE by making sure that, in some situations where TUPE would not otherwise have applied, TUPE would now apply. This is where there was a change in the person who carried on activities, either through the person ceasing to carry on those activities on his own behalf and arranging for a contractor to carry them on instead or through the reverse happening, or through there being a change of contractor.
In fact, case law in the European Court of Justice covered that situation so in some circumstances a court or tribunal would be obliged to find that TUPE applied. Therefore, the introduction of the SPC did not extend the scope of TUPE much.
The current Government was, however, concerned about the burden imposed on businesses by the application of TUPE where there was an SPC and consulted on a proposal to abolish SPCs. Perhaps to the surprise of the Government, business leaders, by a large majority (67 per cent; 28 per cent of consultees were in favour of repeal and 5 per cent expressed no view) responded by saying that “the current regulations brought clarity for employers and employees and reduced the number of TUPE claims to Employment Tribunals”.
The Government has, however, proposed that the SPC part of TUPE be amended “to reflect the approach set out in the case law, namely that for there to be a TUPE service provision change the activities carried on after the change in service provision must be ‘fundamentally or essentially the same’ as those carried on before it”. As indicated in these words, the change will simply make permanent the effect of recent case law, in the form of a flurry of Employment Appeal Tribunal decisions.
Several other helpful changes are proposed. One is to allow renegotiation of terms derived from collective agreements one year after transfer, although the reason for seeking the change is the transfer, provided that the change is no less favourable to the employee (although the difficulty of determining when changes are not less favourable will spawn litigation). Another is to extend the time for providing employee information from 14 to 28 days before transfer.
Overall, however, TUPE has been the subject only of tinkering and not radical surgery. That, in my view, is welcome.