The government has published a draft statutory instrument with amendments proposed to be made to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as TUPE). This legislation is due to come into effect on 1 January 2024.
This means that in small-scale TUPE transfers, employers will have fewer obligations to arrange for the election of employee representatives. We have looked at what this means in practice for employers.
What are the TUPE Regulations?
The TUPE Regulations may apply to protect the interests of employees in two situations, subject to certain qualifying conditions being met. The first situation is where there is a business transfer, e.g. where an organisation or part of an organisation transfers to a new owner, for example, when a business is sold. The second situation is where there is a service provision change, which covers where an organisation engages a contractor to do work on its behalf, reassigns such a contract or brings the work back “in-house”.
In these situations there is an obligation to inform and consult with affected employees about the proposed transfer of their employment to a new employer, including to whom they will transfer, when and why it is going to happen and details of the impact of the proposed transfer on them.
What are the current informing and consulting obligations?
Currently, organisations with 10 or more employees must arrange an election to elect new employee representatives of the affected employees for the purpose of informing and consulting about a TUPE transfer, if there are no employee representatives in place already. This can add to the complexity and burden of the statutory obligations triggered by a TUPE transfer upon employers. Currently, smaller businesses with less than 10 employees (known as micro-businesses) don’t have to do this.
If an employer does not properly meet the statutory obligations to inform and consult with employees (or their representatives), then the employer can be liable for claims of protective awards of up to 13 weeks’ full pay per affected employee.
How will this change?
The government is proposing to remove the requirement to hold an election to put employee representatives in place for small-scale TUPE transfers in two circumstances:
• Where an employer has less than 50 employees, irrespective of the size of the transfer; or
• Where the proposed transfer includes less than 10 employees, irrespective of the size of the employer.
This means that the informing and consulting process would be carried out directly with the affected employees instead.
This change only applies to TUPE transfers that occur on or after 1 July 2024 and where there are no existing employee representatives already in place.
There are many other changes that could have been made to make the TUPE Regulations less burdensome and complex for employers. However, the government did not seize the opportunity to do so. For example, making it easier for an employer to change terms and conditions of employment of staff following a TUPE transfer, including harmonising terms and conditions of employment with existing employees. Consequently, the TUPE Regulations will remain largely the same and this appears to have been a missed opportunity.
Our Employment team frequently advises on the TUPE Regulations, business transfers, outsourcing and reorganisations. If you wish advice on this please contact us.