New TUPE Regulations come into force

18 February 2014

On 31 January 2014, the Collective Redundancies and Transfer of Undertakings (Protection of Employment) Regulations 2014 (“the Regulations”) came into force. The Regulations amend both the Trade Union and Labour Relations Act 1992 and the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006)

TUPE 2006 protects employees from dismissal and changes to their terms and conditions in circumstances where the business or part of the business (i.e. the undertaking) to which they are assigned is sold or otherwise transferred from their employer (the Transferor) to a third party (the Transferee).

The key changes introduced by the Regulations are as follows:

  • To reflect recent case law, the “service provision change” (SPC) category of transfer has been clarified to state that a transfer will only be a SPC where the activities carried out after the transfer are fundamentally the same as those carried out before the transfer.
  • An arguably narrower test will now apply in determining whether dismissals are unfair or changes to employees' terms and conditions are void. Dismissals will be unfair and changes void if the reason is the transfer itself whereas previously the reason could also be a reason "connected with the transfer".
  • It has always been the case that changes in terms will not be void nor will a dismissal be unfair if done for an economic technical or organisational reason entailing changes in the workforce (an “ETO” reason). The Regulations have introduced, contrary to recent case law, a provision that the ETO defence can be deployed where the change in terms or dismissal is caused by the relocation of the transferring undertaking.
  • A Transferee can begin collective consultation with affected employees prior to the transfer and consequently, the minimum consultation periods also begin to run.
  • Regarding transfers after 1 May 2014, Transferors must provide to Transferees the prescribed amount of information about the transferring employees (known as employee liability information) at least 28 days (previously 14 days) before the transfer.
  • Regarding transfers after 31 July 2014, micro-businesses of 9 or fewer employees can consult with affected employees directly rather than, as currently, having to elect and consult with representatives.

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