TUPE Regulations changes 31st January 2014

By Julian Cox, Partner at Fletcher Day

February 17 2014 - TUPE 2014 represents the Government's response to concerns raised by businesses that the current TUPE regulations effectively 'gold-plates' the EU Acquired Rights Directive from which the rules are derived, making them unwieldy and overly bureaucratic. The reforms which came into force on January 31 2014 are intended to reduce bureaucracy and increase flexibility surrounding the regulations. For many employers though, particularly small businesses, the new TUPE rules still do not go nearly far enough.

The fact that TUPE derives from EU originating legislation effectively means there is only so much room for manoeuvre. The spirit and essence of TUPE remains very much intact, providing employment protection against dismissal and preserving accompanying terms and conditions for affected employees in situations such as where a business is sold as a going concern or an outsourcing situation. This places great pressure on small businesses looking to grow by acquiring another business as a going concern for example. To remove such protection would require a much more radical overhaul of the UK's legislative relationship with Europe which looks unlikely at this present time.

Perhaps the most significant change to the rules comes in situations where there is a change in service provider with a contractor taking over services, previously provided by another contractor. An amendment to the Service Provision Change (SPC) provisions under the current TUPE regime is to be introduced which clarifies that the activities of a service must be "fundamentally the same as the activities carried out previously" for TUPE to apply. This ought to introduce greater scope for an incoming contractor to argue that TUPE does not apply.

The new regulations also confirm that changes to where employees are employed can amount to a 'change in the workforce' meaning that transferring employees whose place of work is re locating may lose protection against dismissal and changes to their terms and conditions post transfer.

Whilst in places TUPE 2014 provide welcome clarity and much needed tidying up for employers and employment law practitioners having to grapple with TUPE and its effect, there are a number of areas where ambiguity still remains. For example, the new rules also introduce further amendments to the existing provisions which protect against dismissal and restrict changes to contracts in TUPE situations.

Going forward, these protections will apply where the sole or principal reason for the dismissal or variation of employment contract is "by reason of the transfer". If past case law history on TUPE is anything to go by, the interpretation of whether changes to contracts of employment in a given situation were made "by reason of the transfer" will become a potential rich source for argument before tribunals and courts.

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