TUPE is one area of employment law that brings out the Euro-sceptic in the best of us!

By Mike Emmott, CIPD Employee Relations Advisor, @emmott_m

What are we to make of the new TUPE regulations that come into effect on 31 January?  Are they a big deal or should HR professionals simply shrug and leave them to the lawyers?  The answer is, as usual, somewhere in between.   

When you look at the changes to the regulations and read the BIS guidance published to accompany them, you are bound to conclude that, although the official heart is in the right place, the Government’s ability to do the right thing is heavily constrained by binding EU legislation and its interpretation by the courts. 

Take the regulation that allows for variations in the contract of employment where there is an economic, technical or organisational (ETO) reason for the variation.  The previous wording provided that an employee’s terms and conditions could not be varied – even if both parties agreed to the change – if the variations were “connected with” the transfer.   The new regulations rule out variation in terms and conditions only if the “sole or principal reason” for the variation is the transfer. 

Will this help employers? Well, yes and no.  Although employers might be able to argue that the reason for changing terms is not the transfer itself, they still won’t be able to harmonise the terms of existing and transferred employees.  The ETO exemption only applies where this entails changes in the workforce, defined by the courts to mean changes in job functions or employee numbers. 

And this is the nub of the problem.  In its initial consultation in January 2013, BIS quoted survey evidence that the lack of provision for post-transfer harmonisation of terms and conditions was a significant burden for employers. It said the existence of ‘two tier’ workforces can present “acute HR burdens from having to manage multiple terms and conditions”.  There may be problems with payroll, arising from having to run different pay rates; and employers may be unable to make even minor changes, such as the day of the month salaries are paid.

So on this major issue of employers’ ability to harmonise post-transfer, it looks like no significant change to the status quo.  There is still no rule of thumb or fixed period after which employers can assume it’s safe to make changes in terms and conditions.  In the traditional formula, it all depends on the circumstances of individual cases. 

On other fronts, there is evidence of the Government wanting to make employers’ life a bit easier.  For example, employers can now change terms derived from collective agreements after one year from the transfer, provided they are no less favourable overall.  But legal advice suggests that employers should still approach with caution, given the likely difficulties of establishing if revised terms are in fact less favourable.  

We can only see the new TUPE rules as a well-intended but largely ineffectual and essentially a symbolic effort to make business transfers less of a legal minefield for employers.  It would be nice to think that experience might show this judgement to be mistaken but I’m not holding my breath.

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  • I do believe your closing paragraph says it all...... There is change .... but there is no change !  So Keep Calm and Carry On !