How should employers prepare for proposed changes to the transfer rules? Our comments as featured in People Management.
According to government figures, there are currently between 26,500 and 48,000 Tupe transfers taking place each year, affecting between 1.42 million and 2.11 employees annually: a staggering number which has prompted efforts to reform employment legislation relating to transfers.
Since the Transfer of Undertakings (Protection of Employment) Regulations 2006 came into force, concerns have frequently been raised about them going beyond the requirements of European law, especially that the regulations are overly bureaucratic and hamper entrepreneurialism, not least in the way they apply to service provision changes.
Tupe protects employees if their work goes elsewhere, such as when one business buys another, or when a business engages a contractor to carry out work previously done in-house, or when work that was once contracted out is brought in-house.
The beneficiaries of Tupe are the employees who are able to claim unfair dismissal in a number of scenarios where their job is effectively relocated. The fact that staff must be transferred with their current level of pay and other benefits has been a headache for businesses wishing to streamline terms and conditions.
The Government has suggested changes to Tupe as part of its review of employment law and the consultation on these has just closed. The proposed changes include:
- removing the provision which brings most service provision changes within the scope of Tupe, reverting to the position under the old regulations
- replacing the requirement for transferors to provide employee liability information to transferees 14 days prior to a transfer date with a more general provision
- changing the provision restricting transferees from making changes to transferring employees’ contracts of employment to reflect the less restrictive European law approach
- revising the meaning of “entailing changes in the workforce” to include a change of workplace location so some redundancy dismissals arising from a relocation will not be automatically unfair
- allowing transferors to rely on transferees’ ETO reason for making dismissals connected with a transfer prior to the transfer itself
- specifying that transferees can start a consultation with the transferor’s employees pre-transfer about collective redundancies proposed to take place post- transfer
- confirming that ‘micro businesses’ (proposed as those with fewer than 11 employees) will be able to inform and consult with employees directly rather than through representatives.
To ensure they are prepared for the likely changes, employers should:
- review their contract bidding process – there may no longer be a need to factor Tupe costs in at the start of a service contract but employers should budget for potential redundancy costs at the end of it
- identify those assigned to a specific contract and at what cost, as these employees may no longer transfer under Tupe when the contract ends
- consider whether the workforce should be reorganised and/or required to work more flexibility to make best use of their skills when contracts end
- review Tupe provisions in existing commercial contracts to determine whether these legislative changes have been catered for
- ensure that employee records are up to date – employee liability information could be required quickly without the 14-day lead time to get your house in order
- ensure trade union or employee representatives are aware of the possibility of earlier collective consultation pre-transfer
- review existing redundancy policies.
Although the changes to Tupe are still at the consultation stage, HR professionals would be wise to familiarise themselves with them now. Should the transfer rules become relevant in the not-so-distant future, for example, if the business is sold or a major contract is won, the implications for how the business is run could become far reaching.
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