TUPE Changes Announced Today - Less Dramatic Reform Than Expected?

by Dechert LLP

TUPE - the Transfer of Undertakings (Protection of Employment) Regulations 2006 - is seen as one of the most complex, difficult and unpredictable areas for businesses to deal with when conducting business sales, outsourcings and retenderings. The Government has been conducting an extensive consultation process about potential reform of TUPE and the Department for Business Innovation and Skills has today published the Government's response to that consultation. This OnPoint reports on the Government’s conclusions.

By way of an overview, the changes that the Government now plans to introduce are less dramatic than those floated in the consultation. Most significantly, the Government has listened to the consultation responses it received and will not be dumping service provision changes. The changes that will be made should make TUPE easier to work with – for example, by requiring earlier provision of information about the transferring employees to the new employer, providing that dismissal on a relocation will not be automatically unfair, and providing that consultation prior to transfer will count towards any obligation to conduct collective redundancy consultation. No formal date for the introduction of the changes to TUPE has yet been confirmed but it is understood that this is planned for January 2014.

The main points to note are as follows:

  • Service provision changes will be retained.
    Some businesses don’t like service provision changes as they make it much more likely that TUPE will apply to switches of contractor – but much of business prefers the certainty they provide compared with the previous uncertainty in the case law. TUPE applies not only to transfers of undertakings – in the sense of the traditional business sale – but also to “service provision changes” – outsourcing, retendering and in-housing of services – where there is a transfer of activities conducted by an organised grouping of employees. The consultation had considered the removal of service provision changes from TUPE on the basis that they constitute “gold plating” of the EU legislation which TUPE implements into domestic law and impede competition by transferring to incoming contractors the employees of a contractor with whom the client no longer wishes to deal. The retention of service provision changes is something of a surprise, but this decision will be a considerable relief to those who were concerned that the abolition of service provision changes would have created enormous uncertainty about the application of TUPE to outsourcing and other transfers of service contracts. Whilst the service provision change regime has been criticised in some quarters for creating inflexibility, the greater certainty which it produces is of assistance to commercial parties in their contract negotiations. There will be a slight tweak to the service provision change legislation to clarify, consistent with the most recent case law, that for there to be a service provision change, the activities in question must be “fundamentally or essentially the same post transfer”. Material changes in the nature of the service and the method of delivery may take a switch of contractor outside the scope of the service provision change regime.
  • The requirement on transferors to supply employee liability information is to be retained and will need to be complied with by no later than 28 days before transfer rather than 14.
    The abolition of the obligation to provide employee liability information – a specified set of information about the transferring employees, such as their basic terms of employment, names, recent disciplinary and grievance record, etc. – had also been considered. The decision to retain this obligation and to require transferors to provide the information earlier will please incoming contractors. This is particularly helpful for contractors who do not have the benefit of detailed contractual arrangements upon which they can rely with regard to the details of the transferring employees. That said, some will still argue that 28 days before transfer is still not early enough.
  • Amendments will be made to the provisions concerning transfer related dismissals and contract changes.
    The provisions of TUPE relating to when dismissals are automatically unfair and when contract changes are invalid will be amended. It appears likely that these prohibitions will be amended so that the relevant action is only prohibited when “by reason of” the transfer. Currently these protective provisions bite when the relevant action is by reason of, or connected with, the transfer. This change will effectively tidy up TUPE to ensure that its wording matches more closely that of the EU law which it implements, and may allow employers greater scope to argue that dismissals and contract changes are not prohibited by TUPE if made for other reasons. Amendments will also be made to clarify that unilateral changes permitted by the employee’s contract which could have been made in the absence of a transfer are allowed.
  • Relocation will be an ETO reason.
    A dismissal which is connected with a transfer is automatically unfair unless it can be justified by an “ETO reason”, in which case the dismissal is assessed for its fairness on the normal principles of unfair dismissal law. An ETO reason is an “economic, technical or organisational reason entailing a change in the workforce”. Historically, relocation of a business does not qualify as an ETO reason – dismissal on a relocation, which might otherwise look like a (geographical) redundancy, would therefore be automatically unfair. This change will mean that dismissals when there is a TUPE transfer which entails a move of location will not be automatically unfair. However, they will still need to be handled carefully to avoid unfair dismissal claims.
  • Pre-transfer consultation by the transferee will count for collective redundancy consultation purposes.
    This change will be welcomed as it will make it easier for transferors and transferees to conduct redundancy exercises in relation to business sales, for example on a relocation or downsizing, where collective consultation is required. Collective consultation is required with recognised unions or elected employee representatives in relation to redundancy exercises affecting 20 or more employees under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. This entails 30 or 45 days' minimum consultation depending on the number of staff affected. This change will mean that any TUPE consultation conducted before the transfer which leads to the redundancies will count towards compliance with the collective redundancy consultation obligation.
  • Terms and conditions derived from collective agreements can be renegotiated after one year from the transfer, provided that overall the change is no less favourable.
    Employers who acquire businesses where the employees’ terms are determined by a collective agreement will welcome the (albeit limited) flexibility which this change provides.
  • Micro businesses will be able to consult staff directly about TUPE where there is no recognised union or existing employee representatives.
    Whilst the Government has rejected the suggestion that micro businesses with fewer than 10 employees should be exempted from any of the changes being introduced, this change will reduce the administrative burden on micro-businesses of consultation about TUPE transfers.
  • Terms derived from collective agreements will be “frozen” at transfer.
    Consistent with the recent Court of Justice of the European Union decision in Alemo-Herron, transferring employees whose employment is derived from collective agreements will transfer on those terms – the transferee will not be bound by any changes to a collective agreement or pay negotiation arrangement to which it is not a party post transfer.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dechert LLP | Attorney Advertising

Written by:

Dechert LLP

Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.