TUPE Update - Mitigating The Risk - November 2013

Draft Amendment Regulations Published

The Government published draft Regulations to amend TUPE on 1 November. This follows the publication of the Government's response to the consultation process on reforming TUPE in September 2013 ("Consultation Response") (see earlier Briefing Note). In brief, the key headlines are as follows.

Timing

The current indication is that the draft Regulations will be laid before Parliament in December and that the amendment Regulations will come in to force in January 2014.

TUPE and collective redundancy Consultation

In order to allow redundancy consultation to commence pre-transfer, the collective redundancy legislation will be amended so that a transferee may, with the transferor's agreement, elect to engage in pretransfer consultation regarding redundancies which will impact on one or more of the transferring employees after transfer.

Restrictions on varying contract Terms

Arguably, this is the most interesting amendment. TUPE currently provides that any changes to terms and conditions post transfer are void if they are made because of the transfer, or for a reason "connected" with the transfer, that is not an "ETO"; (an economic, technical or organisational reason entailing changes in the workforce).

Under the new provisions, if the variation is because of the transfer, but there is an ETO reason, then the variation will be permissible. Within the Consultation Response the Government acknowledged that the Directive (and case law on it) does not explicitly allow variations by reason of the transfer even if there is an ETO. It argues, however, that it would not be logical for the Directive to permit dismissals for an ETO but not to permit agreed contractual changes. The issue of whether this new provision is consistent with the Directive will need to be considered by Employment Tribunals if the regulations are bought in as currently drafted.

Additionally, there is completely new provision that a variation will be permissible if the contract permits the employer to make such a variation.

Additionally, there is completely new provision that a variation will be permissible if the contract permits the employer to make such a variation. Again, this was trailed in the Consultation Response. Particularly, mobility clauses were given as an example and the reference was to "unilateral variations". It is arguable that application of a mobility clause or a flexibility clause permitting alteration of duties does not amount to a variation of contract, rather it is merely the application of...