Opinion

So finally the Department of Trade and Industry (DTI) has published its elusive consultation document on amending the Transfer of Undertakings (Protection of Employment) Regulations 1981 (Tupe). The Acquired Rights Directive was amended back in 1998, and the UK had until 17 July this year to implement the changes. The DTI has periodically promised a consultation document with draft regulations appended, but on enquiry in July, it denied all knowledge.
Without fanfare, a consultation document has now been produced, but the promised draft regulations are nowhere to be seen. The Government aims for a fair balance between flexibility in business restructuring and fairness to employees. I doubt whether the measures proposed in the consultation document are capable of achieving this aim, as they do not really address some of the fundamentally difficult questions that have arisen in the interpretation of Tupe in recent years.
The document starts off well enough, but quickly steps knee-deep into the mire about the vexed question of service provision changes. While the troublesome Ayse Süzen decision is mentioned, it bears no influence on what follows. It proposes extending the scope of Tupe to include all service provision changes. This is exactly what is needed – it would do away with the artificial two-part transfer device cooked up in Dines Initial Healthcare. Coupled with the proposed compulsory provision of employee information by the transferor, this extension might solve many of the cases. My concern is that it doesn't go far enough to eliminate the need to decide whether there is an 'economic entity'. I applaud the attempt to define the indefinable, but the Government accepts that there are some pretty fundamental drawbacks to extending the scope of Tupe, not least of which is the continued risk of deliberate avoidance. Nevertheless, it has shied away from inserting any extra anti-avoidance provisions.
The proposal to extend the scope of Tupe to transfer occupational pension rights is not surprising. The only real choice is to maintain the status quo or extend the coverage to transfer those rights. The public sector is already subject to providing 'broadly comparable' rights under Government Actuary Department guidelines. The suggestion under Option 4 of providing 'similar value' is more flexible than 'broadly comparable' and would be workable. But to result in no loss to the employee's rights, post-transfer accrual must be based on a truly unbroken period of accrual.
The drafting of the 'economic, technical or organisational (ETO) reasons' derogation is to be improved. Apparently, the rest of the EU thought it so obvious that changes to terms and conditions would be effective if for an ETO reason, that the UK's amendment to the directive on this was considered superfluous. The drafting of Tupe is to be improved to make this clear. With recession on everyone's mind, the proposed changes in insolvency cases may prove to be the most important in the immediate term. There are a number of other provisions that essentially 'clean up' Tupe as it currently stands.
Yet ETO changes to terms and conditions could only be truly effective if the requirement for 'entailing a change in the workforce' were removed. There is no suggestion to clarify the big question of when the transferor can 'borrow' the transferee's ETO reason. The transfer of liability for failure to consult is studiously avoided, as is any mention of constructive dismissal and the controversial Humphreys Oxford University decision. The Government has the opportunity to make a real difference to this issue, but has backed off several issues that need a harder line. Much more work is needed to achieve the expressed aims and to make any real difference to Tupe's practical application.