The Acquired Rights Directive (ARD) applies across the Member States of the European Union and is implemented in the UK by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (the “TUPE Regulations”). Under the ARD and the TUPE Regulations, employees automatically transfer on the sale or transfer of a business or undertaking and, under the TUPE Regulations only, on a service provision change as well. Last year, the UK Government consulted on the scope of the TUPE Regulations, primarily concerned that they went further than was required by the ARD. The result was the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (the “TUPE Amendment Regulations”), which take effect on various dates throughout 2014. Although not as far reaching as first envisaged, the new regulations enact a number of important changes of which those involved in the transfer or sale of businesses or in outsourcings of services should be aware. The key amendments are:

1. Changes to terms and conditions now permitted (in limited circumstances): Transferees (generally the buyer or new service provider) can now make changes to terms and conditions of employment of transferring employees if the sole or principal reason for the change is an economic, technical or organizational reason entailing a change in the workforce (an “ETO Reason”) and the employee agrees to the change; or the employee’s employment contract allows the change to be made. Although this amendment is helpful and loosens the existing rules, it is unlikely to go far enough to allow a transferee to change terms for the most common reason, harmonization...