· 2 min read · News

Be prepared for the tightening up of TUPE


The Government calls forcomments on its proposals foramending the TUPE law. Janet Gaymer lists some key points

What happens to an employees rights when the work they do is transferred as a result of a merger, acquisition or outsourcing? As HR professionals will know, the law is set out in the Transfer of Undertakings (Protection of Employment) Regulations 1981 commonly known as TUPE.

In May 1998 the Government announced that it intended to amend this law. Since then there have already been amendments to employers obligations in relation to information and consultation. But in September proposals were announced for delivering the promised, more general reform of TUPE. A consultation document and more detailed background paper has been issued* and comments sought by 15 December 2001.

The new regulations arising from consultation will go to Parliament in the summer of 2002. The following are four of the main areas which will affect all employers where a transfer of a business is involved.

First, where a business hires a contractor to perform specific work (such as cleaning) which has previously been done by the businesss own employees and then at some point decides to terminate the arrangement and do the previously outsourced work in-house or re-assign the contract to another organisation. If TUPE applies, the individuals who do the work become employed by whoever is responsible for having the work done. However, where individuals undertake different types of work in an organisation or are seconded on a temporary basis to undertake the work concerned it may not be clear whether their contracts of employment are transferable under TUPE.

It is therefore suggested that before any transfer employees should be clearly pre-assigned to an organised group dedicated to performing the work on behalf of the client concerned. Such assigned employees would then be treated in the same way as cases where TUPE normally applies that is, their contracts of employment would be transferred with the group to any new recipient of the services.

The Government acknowledges that this would involve the introduction of a number of new criteria for the application of TUPE which could lead to disputes and invites suggestions for workable approaches.

Second, there is the legal position in relation to pension rights on transfer of a business. A number of options are set out and the Government recognises that employers will need time to prepare themselves for any changes. In the meantime, the suggestion that occupational pension rights should be broadly comparable before and after transfer is rejected, except for the public sector.

Third, at present under TUPE there is no need for the company providing the service pre-transfer to inform the company taking over the service in any detail of the rights and obligations of employees being transferred. Under the new proposals it will have to give written notification. If this is adopted, information held in HR departments will need to be up-to-date and complete.

Fourth, there is the matter of changes to terms and conditions of employment of employees affected by a transfer. UK case law ruled that any change which was triggered by the transfer was invalid. However, the Government intends to make it clear that such changes, even if transfer-related, may be permissible if they are for economic, technical or organisational reasons entailing changes in the workforce.

And finally, an area which will be of particular interest to international companies. Whether or not an employees rights are protected by TUPE depends on whether they are working in this country. It is now proposed that those who ordinarily work in the UK will be protected under TUPE even when they are working elsewhere. The extent of any liability will depend upon an analysis of both national and international law.

In amending TUPE, the Governments intention was to strike a balance between safeguarding employees existing rights and enabling businesses to adapt to changing circumstances. When the proposals are implemented, it will be the HR function that will need to adapt first.

*Available from Mrs Pat Wright, Employment Relations Directorate, Department of Trade and Industry, UG067, 1 Victoria Street, London, SW1


Janet Gaymer is senior partner at Simmons & Simmons