UK: Draft TUPE Regulations Published at Last

Last Updated: 5 April 2005
Article by Christopher Booth

Originally published March 2005

The DTI has finally published draft TUPE Regulations designed to update UK law in line with the European Acquired Rights Directive. It is hoped that the new Regulations will bring greater clarity to the legal framework governing business transfers and outsourcing. The final Regulations are expected to come into effect on 1 October 2005

The draft Regulations are subject to a public consultation exercise which ends on 7 June 2005. Significant changes are unlikely as the Government published its decisions on the relevant policy issues some two years ago and, generally speaking, is not proposing to revisit those issues at this stage.

How current law will change

Changes made by the Regulations include:-

  • Extending the scope of TUPE to cover virtually all ‘service provision changes’. This means that where services such as cleaning or catering are outsourced, re-tendered or brought back in house TUPE will almost always apply. This has been Government policy in the public sector for some time and will therefore have greatest impact in the private sector where previously there has been some uncertainty;
  • Clarifying the law governing whether a transferee can validly change terms and conditions following a TUPE transfer - although some commentators remain sceptical that the amendments will achieve the desired effect;
  • Improving the transparency of the transfer process by ensuring that the transferor has to notify the transferee of the identity of the transferring employees as well as the associated rights and liabilities which will go across - failure to comply could result in the transferor having to pay the transferee a fine of up to £75,000; and
  • Allowing greater flexibility in the application of the Regulations to certain insolvent businesses in line with the Government's ‘rescue culture’.

Controversially, the DTI is considering a ‘professional business services exemption’, so that TUPE would not apply to service provision changes involving ‘white collar’ employees. This is seen as a policy issue on which views are sought.

Practical Implications

Overall these amendments are to be welcomed as promoting greater certainty, thereby reducing the likelihood of disputes and litigation. They should be considered alongside the Pensions Act 2004 which, from April 2005, will give private sector employees some protection in respect of occupational pension rights on a TUPE transfer. The Government has promised extensive guidance on the new Regulations to be issued ‘if possible’ by mid July.

Equal Pay: Civil Service Claims Fail

In a decision that will come as a relief to the Government, the Court of Appeal has decided that European law does not allow male civil servants in one Government department to compare themselves with female civil servants in other Government departments when making an equal pay claim. The refusal to allow such a broad comparison will be of interest to all large employers, particularly those in the public sector.

No Claim under UK law

The claimants accepted at the outset that they could not bring a claim under the UK Equal Pay Act. That Act only allows a comparison between men and women ‘in the same employment’ ie employed ‘at the same establishment’ or at different establishments of the employer under ‘common terms and conditions’. Although the claimants and their chosen comparators were clearly employed by the same employer - the Crown - they worked at different establishments and the fact that their pay negotiations had for some years been devolved to individual departments rather than being conducted on a civil service wide basis meant that there were no common terms and conditions.

The European provisions

The relevant European provisions (which can be relied on directly in UK courts and tribunals) are found in Article 141 of the EC Treaty. This sets out the principle of equal pay for work of equal value but does not go into any detail on the comparison required. The claimants therefore argued that Article 141 automatically applies whenever comparators of a different sex are employed by the same employer.

The Court of Appeal disagreed. Article 141 requires something more than the mere fact of common employment by a single employer. It also requires that pay and conditions are determined by ‘a single source’. According to the Court, this was in accordance with the earlier ECJ decision in Lawrence which identified the single source test as being a vital component of any comparison under Article 141, whether the chosen comparators were employed by the same employer or not. On the facts in Robertson, the degree of delegation in the civil service was such that this test could not be satisfied and the claims failed.

Practical Considerations In the majority of cases the fact that employees are employed by the same employer will mean that terms and conditions are determined by a single source, allowing an equal pay comparison to be made. However the Robertson case shows that delegation of pay negotiations by an employer may in some circumstances prevent comparisons across the organisation - although arrangements put in place specifically to avoid equal pay claims are unlikely to find favour with the courts.

Do You Need To Know?

Mandatory Use Of New Tribunal Forms Delayed

The new style claim and response forms (ET1 and ET3) introduced for use on a voluntary basis last October as part of the Government's reform of tribunal procedure, will not become mandatory in April 2005 as previously planned. The new forms will now become obligatory on 1 October 2005. Despite this, employers defending tribunal claims before the October deadline would still be well advised to use the new form ET3, not least because it reflects the statutory discipline and grievance procedures brought in last autumn. Copies of the forms can be printed off from http://www.employmenttribunals.gov.uk/publications.asp

Minimum Wage to Cross the £5 Barrier

The Government has announced that the National Minimum Wage adult rate is to increase from £4.85 to £5.05 per hour from 1 October 2005. At the same time the youth rate for 18-21 year olds goes up from £4.10 to £4.25 per hour. Meanwhile the rate for 16/17 year olds, introduced in October 2004, is to remain unchanged at £3.00 per hour.

Religious Discrimination: First Successful Claims

New rules outlawing discrimination on the grounds of religion and belief came into force in December 2003 and the first successful claims are now starting to be reported. In one case a tribunal held that a practising Christian had suffered indirect religious discrimination when she was required without justification to work a Sunday shift, thereby preventing her from attending Church. In another, a Muslim employee won his case after being sacked for taking extended leave to make a pilgrimage to Mecca. ACAS has produced useful guidance on this topic which includes details of all the main religious festivals: see www.acas.org.uk/publications/pdf/religion.pdf

Cases referred to in this update:

Cases referred to in this bulletin: Robertson v Department for Environmental Food & Rural Affairs CA 22.2 05 Lawrence v Regent Office Care Ltd [2003] ICR 1092;;Williams-Drabble v Pathway Care Solutions Ltd, Nottingham Employment Tribunal, 10.1.05 (2601718/04) and Khan v G and J Spencer Group plc, Leeds Employment Tribunal 19.1.05 (1803250/04).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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