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Law for Business

Knowhow - guidance - precedents

16 SEP 2013

Major changes to TUPE announced

The Department for Business, Innovation and Skills (BIS) has announced planned changes to the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), which protect workers during a transfer of business ownership.

In its response to a consultation held earlier this year, BIS has announced reforms that will allow businesses to renegotiate employees' terms and conditions a year after the takeover, on the condition that the change is "no less favourable" to the workers.

"By making these changes we will clear out the cobwebs in some of the rules which will give businesses more clarity about conducting transfers," said employment relations minister Jo Swinson.

Where employees have their terms and conditions set out in collective agreements, BIS has confirmed that the only ones which must be carried forward by the new employer are those which were in effect when the transfer of ownership. Unless the new employer was specifically named in or contributed to the agreement, they will not be bound to uphold it.

Although the new rules will not repeal those which govern changes of service provision, they do seek to offer some clarity, according to BIS - the government will actually set out part of the test which determines whether service provision has changed. A change will only be considered to have occurred when the activities of the businesses after the takeover are "fundamentally or essentially the same" as they had been before the transition.

Crucially, this means that if businesses make radical changes to either the services they provide or how they do so, any jobs that are lost as a result will no longer be automatically treated as unfair dismissal.

Similarly, if the new owners decide to move the workplace so that it provides the same services in a different location, redundancies which follow could not lead to unfair dismissal claims.

BIS claims that the law achieves a balance between protecting workers and cutting bureaucracy for businesses at a time when company administration will already be undergoing significant change.

Currently, transference of ownership means that businesses must at least inform and sometimes even consult trade unions - and in small businesses, where they may not already be a union representative, they must be elected before anything can proceed. BIS says that it wants to change the law so that micro-businesses with fewer than ten employees are allowed to consult directly with workers when there is no union recognised.

A new edition of TUPE: Law and Practice is due out next year, priced £85.00.
ISBN: 978 1 84661 290 9

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