TUPE: The Story So Far...

Angela Schettino writes:

As many readers will be aware, the UK Government and the NI Executive have sought to amend the Transfer of Undertakings (Protection of Employment) 2006 (TUPE) Regulations by way of simplifying content for all parties.

Where We Are Now...

The Department for Business Innovation & Skills in GB published the coalition government's response to the consultation on TUPE last year and consequently have made amendments to the GB TUPE Regulations in 2014. These did not however extend to NI. The NI Executive and Assembly are still reviewing the NI Consultation results as well as the changes in GB. We are yet to hear what the outcome will be in NI and if all or any of the changes made in GB will be made in NI.

A separate consultation response document for NI will follow at some point this year, with any amending legislation to follow as soon as possible thereafter. The NI Employment Law Consultation results (general) are due to come out in June this year and we expect that the intentions with regard to TUPE may be referred to at the same time.

TUPE as it Stands

Transfer of Undertakings (Protection of Employment) 2006 (TUPE) protects employees who belong to the undertaking (i.e. a project or work activity) that is being transferred. TUPE applies regardless of whether an organisation operates to make a profit or has purely charitable objectives and regardless of the size of the organisation. A TUPE transfer can involve just one employee.

• All employees employed in the undertaking to be transferred automatically become employees of the new employer (the “transferee”). An employer cannot pick and choose which employees to take on.
• Employees must transfer on the same terms and conditions (‘contracts of employment’) as those they had with their former employer (except for certain occupational pensions rights. Length of service is also maintained from the former employer.
• The new employer takes over all liabilities (e.g. unfair dismissal or discrimination claims) arising from those contracts of employment, except for criminal liabilities.
• Any liabilities relating to employees who were dismissed before the transfer (for a reason connected with it) also transfer to the transferee. So if the transferor were to dismiss an employee immediately before the transfer, to avoid the employee having to transfer, the liability for unfair dismissal would fall to the transferee.
• Any collective agreements made with recognised trade unions and any recognition agreements where the business retains a distinct identity following the transfer will also transfer.
• There is special protection against dismissal. Employees who are transferred cannot, in most circumstances, be dismissed, if the dismissal is in connection with the transfer.
• The above provision does not mean that an employer cannot dismiss in any circumstances – a case of gross misconduct, for example, would warrant dismissal. A dismissal in this case would be for misconduct, not on account of the transfer.
• Employees may object to the transfer or resign and claim unfair dismissal if the transfer involves a substantial change in their working conditions to their material detriment.

Changes Made in GB

The original regulations have been deemed too complicated and cumbersome, in some cases ‘Gold Plating’ the original intentions of the Directive. Below is a summary of changes already made in GB which as yet do not apply in NI.

• Allowing renegotiation of terms derived from collective agreements one year after the transfer, even if the reason for seeking the change relates to the transfer. The overall change must be no less favourable to the employee.
• Providing expressly for a static approach to the transfer of terms derived from collective agreements (in line with the Alemo-Herron case at the CJEU).
• Allowing location of the workforce following a transfer to be an ETO reason for dismissal, thereby removing automatic unfairness from those dismissals.
• For a TUPE service provision change, the activities carried on after the change in service provision must be “fundamentally or essentially the same” as those carried on before it.
• Pre-transfer consultation can count for the purposes of complying with the collective redundancy rules, provided that the transferor and transferee can agree and where the transferee has carried out meaningful consultation.
• The time to provide employee liability information before the transfer to the transferee will increase from 14 to 28 days.

There is currently a view that some of the changes in GB are inconsistent with the objectives of the European Directive. We may therefore see a lot of test cases emerging in GB and ultimately the reversal of any controversial changes made. This may prevent their implementation in NI.