Government Consultation On The Transfer Of Undertakings (Protection Of Employment) Regulations 2006 ('TUPE') - Does It Go Far Enough?

Our US clients find a great deal of UK employment law frustrating because it seems so heavily weighted in favour of employees. We share a rich common law tradition with the US, but this most enduring of our legal exports is ever diminishing in the face of the relentless march of statutory regulation of the employment relationship. TUPE, along with its European parent, the Acquired Rights Directive, is often ranked amongst the worst offenders. TUPE also adds cost and complexity to business transfers and a need for advice from employment lawyers.

The complexity of TUPE prompted the government's call for evidence on the effectiveness of TUPE between November 2011 and January 2012. Its response was published in September last year, covering the following main areas of concern:

Extend the deadline for the provision of employee liability information beyond the current deadline of 14 days prior to the transfer; Review the prohibition on effective post-transfer harmonisation of terms and conditions of employment; Consider excluding service provision changes from the scope of TUPE; Consider further clarification on treatment of pensions and related benefits under TUPE; Provide greater clarity regarding when and how TUPE applies in insolvency situations; and Consider clarification and broadening of the concept of "economic, technical or organisational reason... entailing changes in the workforce". We await with interest the government's publication of its proposals for changes to TUPE. What we can predict is that although there may be some changes to the way TUPE operates, given TUPE's origins under EU law, the fundamental question of whether we should retain TUPE at all will not be the subject of consultation. Doing away with TUPE sounds like a radical thought, but many jurisdictions outside Europe do not have a TUPE equivalent. For example, in the US, there is very little employment law regulation of business. To the extent that there is regulation, it is mainly limited to obligations to give employees, unions and local and state authorities notice of the transaction and its effects.

The key difference between the UK and US is that in asset purchases in the US it is for the purchaser to choose whether it wishes to take any employees from the seller. If not, the employees are terminated and do not transfer. Share purchases operate largely as they do under English law; the employing entity does not change and subject to the purchase...