A response has been produced by the Government into their recent consultation into proposed changes to TUPE which ended earlier in the summer (May News Update). The key outcome of this consultation is that the ‘Service Provision Change rules’ will not now be scrapped; this is following an overwhelming level of support for these to be retained within TUPE.
Put simply, ‘service provision changes’ (SPC) arise between contractors and the clients who ‘hire’ their services; the SPC will apply to the contractual arrangements in place between the client and contractor and include: -
contracting-out/outsourcing – where a contract for an area of work previously undertaken by the client is awarded for the first time
re-tendering – where the contract is renewed or assigned to a new contractor and/or;
contracting-in/in-sourcing – where a client brings a service in-house which has previously been undertaken by an external contractor.
TUPE applies to any ‘organised groupings’ of employees’ whose role is to carry out these activities on behalf of the client and whilst it was anticipated that these would be removed, it seems that they are here to stay. However, the provisions will be amended to reflect recent case law in this area; i.e. that ‘the activities carried on after the change in service provision must be ‘fundamentally’ or ‘essentially the same’ as those carried out before it’, for there to be a SPC under TUPE.
In addition, the rules around ‘employee liability information’ will essentially remain in place, with the only change being that the information will have to be provided no later than 28-days before the transfer takes place, as opposed to the 14-days that it has been up until now. The existing defence will remain, which is where it is not reasonably practicable for the information to be supplied 28-days before the transfer.
The other changes that will be taken forward following this consultation will be: -
Micro-businesses (less than 10 employees) will not have to elect employee representatives to consult with over TUPE, where there are no existing provisions in place i.e. Trades Union Representatives or other representatives.
Consultation taken prior to the transfer by the Transferor will count for the purposes of complying with collective redundancy regulations.
Expressly providing for a ‘static’ approach to the transfer of terms derived from collective agreements i.e. that the transferee will not be bound by national negotiations that take place after the transfer has been affected, the terms and conditions are set as those in place at the time of the transfer.
Transferees will be able to renegotiate terms derived from collective agreements after one-year, even when the reason for the change is connected to the transfer itself; provided that the renegotiated terms are no less favourable.
Changes to work locations after a transfer can be classed as an ‘Economic, Technical or Organisational’ (ETO) reason; this will mean that where genuine redundancies arise as a result of a relocation of the work, they will not be automatically unfair and it will be possible to agree changes to workplace locations.
In addition, while dismissals and changes to terms and conditions which are by ‘reason of the transfer’ will remain unlawful, it is intended to remove the ‘alternative provision’ within TUPE which is concerned with ‘matters ‘connected with’ the transfer’. EU Law prevents ‘pure harmonisation’, but the Government are suggesting that unilateral changes to terms ‘which could otherwise have been made (but for the transfer) or for ‘Economic, Technical or Organisational’ (ETO) reasons’ may be possible. We will continue to monitor just how far this will give Organisations the flexibility to change terms and conditions following a transfer.
It is intended that the draft regulations will be ready by December 2013, with January 2014 identified as the implementation date. Transitional arrangements will be put in place to allow employers a lead-in period during which they can plan any future transfers in line with these new rules.