Terrifying TUPE

February 5, 2008

TUPE: Transfer of Undertakings (Protection of Employment) 2006 is a difficult piece of legislation for Employers to handle, and something I’ve still not managed to fully get my head around. The legislation exists to protect employees’ terms and conditions, including length of service, when a transfer of the “undertaking” they work for takes place. These days it’s a common issue, as mergers and acquisitions have become a major part of business.

The 2006 regulations brought about changes to the existing legislation, most notably relating to provision of services: if an outsourced business function or service is changed, e.g. through re-tendering, then the existing individual(s) carrying out the service may be entitled to transfer under TUPE to the new provider (this might depend on how long they had been carrying out the work and how much of their time was spent on it). This has implications for many services provided to companies including financial services, outsourced functions (e.g. HR), security and cleaning services.

Another uncertain area of the law relates to changing an employee’s terms and conditions following a transfer. The law states that all changes to terms and conditions are unlawful, even when they are favourable changes and even when the employee agrees to them, unless there is a valid economic, technical or organisational (ETO) reason. This obviously makes it difficult for companies to harmonise terms between merged companies following a transfer, which could have negative effects on the merge by making it more difficult to integrate employees.

However, government guidance now tells employers that changes to terms and conditions that are beneficial to the employee are valid, and this guidance was recently supported by the Employment Appeals Tribunal in Power v Regent Security Services Ltd. This could change again though if the case goes to the Court of Appeal. There has been no case law so far on how unfavourable changes would be treated by the courts, so the whole issue is still a bit of a legal minefield My advice when handling issues relating to TUPE is to always seek legal advice from an employment lawyer prior to taking any action.

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Posted by hrgirl | Filed Under Employment Law 

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