The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 come into force in the UK on 31 January 2014. These 2014 Regulations amend TUPE (which implements the Acquired Rights Directive in the UK) and the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) (relating to collective redundancy consultation).
The 2014 Regulations:
- Amend TULRCA, to allow a transferee who proposes collective redundancies, to elect to consult or to start to consult transferring staff about the collective redundancies prior to the transfer. The change means that any pre-transfer consultation will count towards the 30 or 45 day collective consultation period required under UK law on collective redundancies. Currently, any such pre-transfer consultation by the transferee about redundancies would not count towards discharging the transferee’s obligations under TULRCA.
- Clarify the nature of a service provision change. Service provision change was introduced in 2006 to make it clear that outsourcing, insourcing or any other contracting out situation would be caught by TUPE. The 2014 Regulations amend the definition of a service provision change so that the legislation will formally adopt the wording of current case law – by specifying that any activities must be fundamentally the same as those carried out after the transfer.
- Change the provisions relating to changing terms and conditions by reason of the transfer. Currently TUPE provides that any change to terms of employment will be void if the sole or principal reason for the change is the transfer itself or for a reason connected with the transfer which is not an economic, technical or organisational (ETO) reason entailing changes in the workforce. Under the 2014 Regulations, any variation to the contract will be “void if the reason for the variation is the transfer” only – the wording “connected with the transfer” will be removed. This will not apply if there is a valid ETO reason (provided the employer and employee agree to the variation); or the contract permits unilateral variation (for example an existing mobility clause). Variations to contractual terms which derive from a collective agreement will be permitted as long as one year has passed since the transfer and the terms “considered as a whole” are no less favourable for the employees.
- Change the definition of an ETO, specifically the phrase “entailing changes in the workforce”. This is one area where there will be a significant difference as a result of the 2014 Regulations. The current definition has been interpreted by the courts to restrict it to changes in the number of employees or to changes in the functions performed by employees. The amendment made by the 2014 Regulations allows change in location to be within “changes in the workforce”. As a result, redundancies as a result of a change of location following a transfer will not be automatically unfair.
- Amend the rules relating to dismissals and TUPE. The current law makes it clear that any dismissal made where the transfer or a reason connected with it (which is not an ETO reason entailing changes in the workforce) is the reason or principal reason for the dismissal is automatically unfair. The 2014 Regulations amend TUPE so that any dismissal will be automatically unfair if the reason for the dismissal is the transfer itself. The wording in “connection with the transfer” will be removed. Any dismissal justified by an ETO reason will now be “potentially unfair”.
- Clarify that rights in relation to future collective agreements which have not been concluded at the time of the transfer will not transfer if the transferee is not a party to the later collective agreement. This effectively reflects the current case law.
- Make changes to timing on providing Employee Liability Information. Currently TUPE imposes an obligation on the transferor to notify the transferee in writing of certain key information regarding the transferring employees, (“Employee Liability Information”). Such information will now have to be given 28 days before the transfer, rather than the current 14 days. This will apply to transfers which take place on or after 1 May 2014.
- Provide that employers with fewer than 10 employees may directly inform and consult with the employees where there is no recognised independent union or existing appropriate representatives. This will apply to transfers which take place on or after 31 July 2014.