The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) were initially formed to fulfil the EU Acquired Rights Directive. The main objective of TUPE is to safeguard employees’ rights when the business or undertaking they work for transfers to a new employer. TUPE also applies to service transfers to a new provider.
When TUPE applies, employees’ employment and associated rights automatically transfer from their former employer to the new one. Although changes to terms of employment are usually restricted, they are permissible under specific circumstances, such as for economic, technical, or organisational (ETO) reasons.
While the Government acknowledges that TUPE regulations protect employees and provide a legal framework for staff transfers, it also recognises that businesses often find certain aspects of TUPE complicated. In addition, following the TUPE regulations can impose a significant administrative burden and attract high costs for employers.
Taking into account the concerns, the Government recently implemented reforms to simplify the TUPE consultation process for better outcomes for both employers and employees. Effective from 1 January 2024, small businesses can now consult directly with employees about TUPE transfers if there are no existing employee representatives. Additionally, businesses of any size may directly consult employees when proposing the transfer of a small number of employees.
The Government’s proposed amendments to TUPE and abolishing European Works Councils
It has been announced that the Government has initiated a consultation on proposed amendments to TUPE and the abolition of the legal framework for European Works Councils.
This consultation, open until 11 July 2024, seeks feedback on the below proposed changes:
- Clarification of TUPE’s scope: The Government aims to specify that TUPE should apply only to employees, not to workers. At present, TUPE is stated to apply to ‘employees,’ but its definition is wider than that in the Employment Rights Act 1996 and other UK employment laws. This uncertainty led to the 2019 tribunal case of Dewhurst v Revisecatch Ltd, which ruled that TUPE also covers workers. Although this decision is not binding for future cases, the Government aims to clarify this issue. Amending this will help provide clarity for companies undertaking TUPE.
- Managing business transfers to several buyers: The Government proposes that if a business is transferred to several buyers, employees’ contracts should not be divided among them. This follows the European Court of Justice’s decision in ISS Facility Services NV v Govaerts, which allowed for such splits. The proposal recommends that transferees must agree on who will take on each employee, marking a shift from the UK’s pre-Govaerts position. Previously, the transferee taking over most of the service would take over all assigned employees (Kimberley Housing Group v Hambly). The practical implementation of this proposal remains uncertain.
- Abolition of European Works Councils: European Works Councils (EWCs) are those that represent the European workforce of multi-national businesses. This applies to businesses that have at a minimum of:
- 1,000 employees operating over two or more European Economic Area countries (EU member states including Norway, Iceland and Liechtenstein)
- 150 employees in two different member states
The Government plans to demolish the legal framework for European Works Councils in the UK. These councils are consultative bodies representing employees in multinational businesses. Since the UK’s departure from the EU, the Government had already legislated to prevent the formation of new Works Councils. The current proposal aims to allow the disbanding of those that still exist.
How can we help?
Ruby Rai is a Senior Associate in our expert Employment Law team, advising on a wide range of employment matters, including TUPE, redundancies, and senior-level exit strategies, drafting policies, procedures, employment contracts and settlement agreements.
If you would like any advice concerning the subjects discussed in this article, please contact Ruby or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online enquiry form.
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