Summary and implications

The Government has published its long-awaited response to its consultation on TUPE. After a lot of bluster about removing the parts of TUPE that went beyond the Acquired Rights Directive (referred to as "gold plating") what is changing is less far reaching than expected. In brief:

  • The provisions on "service provision change" (SPC) (which includes outsourcing, insourcing and second-generation outsourcing) will not be repealed. This is largely good news as the existence of SPC offers parties a measure of certainty. The revised regulations are expected to make it clear that pre and post SPC transfer activities must be "fundamentally or essentially the same".
  • Parties will continue to have to provide employee liability information (ELI), but the timescale for making the information available will increase from 14 to 28 days before the transfer. It is important to remember that ELI does not cover all information relevant to transferees and should not replace well-conducted due diligence.
  • A new provision will allow transferors to conduct part of the redundancy consultation process before the transfer and a transferee will be able to finish it off post-transfer. This will potentially speed up redundancy dismissals and save costs.
  • Changes to employment terms will be permitted in two narrowly-defined circumstances. First, collectively agreed terms may be renegotiated one year after the transfer and may be replaced by terms which are no less favourable to employees. Second, the response seems to suggest that unilateral changes to individual terms of employment will be permissible if they are made pursuant to a contractual right if such changes would have been made notwithstanding the transfer.

Draft regulations are yet to be published, so we do not know for sure what the law will say. However, these are expected in December with the new legislation to take effect at some point in the New Year.

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