Published June 2014
The Transfer of Undertakings (Protection of Employment) Regulations 2006, or TUPE as it is commonly known, protects the rights of employees when the business or undertaking for which they work transfers to a new employer. Given the number of mergers and service transfers over recent years, there will be few working in the charities and social enterprises sectors that do not have some experience of TUPE.
However, on 31 January 2014, some of the provisions of TUPE were amended by the Government in an attempt to improve the effectiveness and flexibility of the regulations. The key changes that may be of interest if you are about to go through a merger or service transfer process are set out below:
Micro-businesses
From 31 July 2014 charities and social enterprises with fewer than 10 employees (referred to in the amended regulations as micro-businesses) will be able to inform and consult directly with affected employees where no appropriate employee representatives exist. These changes will be welcomed by many smaller charities and social enterprises, as the position prior to the introduction of this amendment was that all organisations had to consult either with trade unions or arrange for their employees to elect representatives to consult on their behalf. The election of representatives was often time consuming and did not make much practical sense as it was often easier for the business or undertaking to speak directly to the individuals affected.
Pre-transfer consultation
For larger charities and social enterprises the amendment allowing transferees (new acquiring employers) to conduct collective consultations (i.e. where it is proposed 20 or more posts will be redundant within the 90 day period post transfer) before the completion of the transfer will be welcome.
Prior to this amendment the transferee would have to wait until after the transfer to begin the 30 or 45 day collective consultation process. This often meant that there was a period of uncertainty for both employees and transferee post transfer. This amendment means that redundancy processes will be able to be concluded more swiftly thereby reducing employment costs for transferees and uncertainty for employees. It should be noted that transferors (the employer prior to a transfer) can refuse to give transferees permission to consult with their staff pre-transfer and redundancy dismissals pre-transfer on account of a transferee’s post-transfer redundancy situation will continue to be automatically unfair.
Service provision change transfers
The previous definition of “activities” (services) in the context of service provision change transfers has been amended to clarify that TUPE will only apply where the activities carried out before and after the transfer are “fundamentally the same”. This amendment replicates established case law but will provide some certainty for organisations involved in service provision change transfers; as this is often a contentious area during a service provision change.
Employee Liability Information
From 1 May 2014, the time-frame for the transferor to provide Employee Liability Information to the transferee has doubled to 28 days pre-transfer. Again this change will be greeted favourably by most professionals in the sector, as it is widely accepted that the current requirement of two weeks is an inadequate time-frame to assess the commercial implications of a staff transfer.
Post-transfer relocations
The meaning of an “economic, technical or organisational (ETO) reason entailing changes in the workforce” will be extended to include changes to workplace locations. This means that redundancies that occur because of relocations of the service following a transfer will no longer be automatically unfair (although ordinary unfair dismissal principles will apply) and contract variations requiring employees to relocate to new locations post transfer will not be void. This is a positive change as there is often a need to relocate transferring staff and these amendments remove the previous risks of automatic unfair dismissal claims in those circumstances.
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