TUPE changes are here: is your business ready?

The long-awaited changes to the TUPE rules came into effect on 31 January. First a quick recap on what TUPE rules are: they protect employees’ rights when the business they work for is transferred to a new employer, as a result of the sale of a business, or outsourcing or where outsourced activities are brought back in-house.

The main changes to TUPE include:

1. Service provision
The Government has not removed service provision changes from the scope of the TUPE rules, but the new rules make it clear that activities carried out under outsourced or tendered work must be fundamentally the same for TUPE to apply.

This may have an impact given the way the direct marketing industry is continually evolving. For example, a client who has in the past had a creative design agency and a separate database management services provider may decide that they want to appoint one service provider to carry out both activities and go through a retendering exercise.

The current agency, which only provides creative design work to the client, retenders for the new combined creative design and database management services. If the current agency does not win the new contract, it cannot claim that the TUPE rules apply because the new combined creative design and database management outsourced contract is not fundamentally the same as the old creative design only outsourced contract.

2. Terms and conditions following a TUPE transfer
Under the old rules changes to employment terms and conditions for a reason connected with the transfer of the business were automatically invalid. Under the new rules changes may be valid if 1) the reason for the change is for an economic technical or organisational reason, 2) employer and employees agree the changes and 3) the terms of the transfer of the business between the old and the new employer would have allowed the new employer to make the change or a new development arises after the transfer, such as the new employer winning a new client.

3. Dismissals
Dismissals are no longer automatically unfair because of a change in the workplace location but employers should put in place provisions to mitigate the consequences of changes in location.

4. Redundancy
Redundancy consultations can begin before the transfer of the business if all parties agree.

5. Information about transferring employees
Information about transferring employees must be given earlier. This change will take effect from 1 May 2014. Under the old rules the old business had to give the new business the information about the transferring employees 14 days before the date of the transfer of the business. Under the new rules the information must be given 28 days before the date of the transfer of the business.

6. Small businesses
Micro-businesses with less than 10 employees will no longer have to elect employees representatives for consultation purposes if no existing employee representatives’ arrangements are in place.

This is a summary of the changes and is not an exhaustive list. The rules are complicated and members involved in a transfer should take their own independent legal advice.

James Milligan, Solicitor, DMA