Business owners and senior managers have no doubt heard of the TUPE legislation, designed to protect the rights of employees affected by certain transactions; typically the transfer of a business to new owners. Other circumstances that can arise involving TUPE include the transfer of certain services from one business to another, such as canteen management or cleaning services, or from an external provider to an in-house service (and vice versa).
The TUPE provisions have long been criticised as a ‘gold-plated’ version of a European requirement, and business leaders have lobbied the government for change over the course of many years. Those calls have been listened to (in part at least) with a series of changes which came into force on 31st January 2014.
What are the changes?
- Businesses will be able to vary the terms of collective agreements from 12 months after the transfer, as long as the updated terms are no less favourable to employees
- The service provision change rules will remain in place. However, for a change to have occurred in accordance with TUPE the activities carried out afterwards will need to be ‘fundamentally or essentially the same’ as previously. Businesses that change radically the way they provide services are unlikely to be caught by the TUPE requirements
- Employees will be protected from contractual changes, but only if the sole reason for the change is the TUPE transfer itself
- Dismissing employees will become easier as they will only be protected if the reason for the dismissal is the TUPE transfer
- As of May 20th 2014, employers planning on making 20+ redundancies post TUPE transfer will be able to commence employee consultation, as long as the current employer consents
- Transferors will have to provide employee liability information to the transferee 28 days before transfer (an increase from 14 days)
- For dismissal purposes, a change of workplace can now be categorised as an economic, technical or organisational reason for dismissal (an ETO reason)
- In an effort to reduce bureaucracy on small businesses, micro-businesses (those with less than 10 employees) will be able to inform and consult with staff directly, as long as there is no union or elected representative already in place
The changes introduced will no doubt deliver benefits to UK businesses, even though they do not go as far as many business leaders had hoped. Despite the changes, TUPE legislation remains an extremely complex area, and as such, it is vital to take specialist advice at the outset of any business transaction that does, or may, involve a TUPE transfer of employees.
Farleys’ team of employment law solicitors has many years’ experience of TUPE transfers, and has handled many business transfers in conjunction with our specialist corporate team. If you are considering buying or selling a business, or part of a business, and want to know whether the updated TUPE provisions will affect that deal, please do not hesitate to contact us today.