The Government’s proposals have been published and they not nearly as radical as had been anticipated by some, and feared by others. The big news is that Service Provision changes will remain albeit in a modified form to reflect the development of case law. A number of the proposed changes are (perhaps surprisingly) sensible and practical for both employers and employees. The main changes proposed with observations beneath are:
(1) Allowing renegotiation of terms derived from collective agreements one year after the transfer, even though the reason for seeking to change them is the transfer, provided that overall the change is no less favourable to the employee. Any change which does not satisfy this requirement will be void.
This proposal brings TUPE in line with Art 3(3) of the Directive in that it permits changes to collective agreements after 1 year. However, it provides greater protection to employees than the Directive for two reasons. First, by imposing the requirement that the overall change must not be less favourable to employees. There is no such requirement in the Directive. Secondly, by requiring any change is to be the product of negotiation.
(2) Providing expressly for a static approach to the transfer of terms derived from collective agreements.
This change reflects the recent CJEU decision in Parkwood Leisure v Alemo-Herron.
(3) Providing that changes in the location of the workforce following a transfer can be within the scope of economic, technical or organisational reasons entailing changes in the workforce, thereby preventing genuine place of work redundancies from being automatically unfair.
This removes the anomaly that dismissals where the workplace closes and the workforce are moved to a new location can be a fair redundancy (assuming proper consultation etc.) but not an ETO reason.
(4) Amending Reg 4 and Reg 7 to bring them closer to the language of the Acquired Rights Directive.
The final wording has not been finalised but is likely to refer to the ‘transfer itself’ rather than ‘a reason connected to the transfer’. There is also likely to be a provision which expressly makes it clear that unilateral variations will be permissible if they are allowed for in the contract. An example given is the mobility clause; however, it is also likely to apply to Bateman v Asda Stores types of unilateral variations.
(5) Amending the SPC provisions to reflect the approach set out in the case law, namely that for there to be an SPC, the activities carried on after the change in service provision must be “fundamentally or essentially the same” as those carried on before it.
This change simply reflects current case law and deals expressly with the ‘fragmentation’ issues that arise. I.e. there will be no SPC if the service is fragmented or changed substantially following transfer. (see most recently Enterprise Management Services Ltd v Connect-Up Ltd)
(6) Amending the Trade Union and Labour Relations (Consolidation) Act 1992 to make it clear in statute that consultation which begins pre-transfer can count for the purposes of complying with the collective redundancy rules, provided that the transferor and transferee can agree and where the transferee has carried out meaningful consultation.
This is a sensible and practical measure.
(7) Allowing micro businesses (i.e. those with 10 or fewer employees) to inform and consult directly affected employees when there is no recognised independent union, nor any existing appropriate representatives.
This is an entirely sensible proposal which is permitted by Art 7(5) of theDirective. Holding elections where there are 10 or fewer than 10 employees is probably an unnecessary burden in most cases. It also only applies where there is no union presence. Where there is then negotiations will be with the union representatives.
(8) Extending the time before the transfer when about employee liability information must be given to the transferee to 28 days.
Given that original proposal was to repeal the ELI requirements completely (which would have been disastrous, particularly in SPC cases) this proposal is not only a surprise but actually addresses the real problem with ELI and that is that is often given far too late. The current Reg 11(6) exception will be retained (where special circumstances make it not reasonably practical to comply with the 28 day deadline it must be provided as soon as reasonably practical thereafter.
As yet no date has been set for implementation although it is expected to be January 2014