Service Contracts – The End of TUPE?

By November 14, 2013Legal Update
Skyscrapers from the ground

It has often been said that the provisions set out in the TUPE Regulations (Transfer of Undertakings [Protection of Employment] Regulations) are some of the most complex out there.

Over the last year the Government has been consulting on the introduction of amendments to the Regulations with a view to simplification. The problem is that each time successive Governments have moved to simplify the Regulations the end result has been more uncertainty and complexity. Will the new draft provisions in fact turn the tide and clarify some of the issues at last?

The name of the new Regulations does not in itself, however, generate great optimism of simplification! The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2013 (the Regulations), was published on 31st October. The Regulations still need to be approved and are expected to come into force in January 2014.

The Regulations state that where there is a service provision change, for TUPE to apply, the activity carried on before and after the transfer must be “fundamentally or essentially the same”.

It had been hoped by many employers who provide services, such as contract cleaning, IT, electrical or engineering maintenance or transport, that a change of service provider would be removed from the scope of TUPE. Currently where staff spend most of their time working on the provision of a service, if the main contractor changes sub-contractor or takes the work in house, then the staff stay with the work, they ‘TUPE over’ into the employment of the new sub-contractor, with continuity of employment and on not less favourable terms and conditions. It had been hoped and speculated by many that this requirement would be dropped and that there could be a genuine return to competitive tendering. These hopeful employers will now be greatly disappointed.

The provisions will still apply although there has been some clarification that the ‘activity’ before and after the transfer must be “fundamentally or essentially the same”. This is usually the case in any event, so it is difficult to see how this is more than a clarification of terminology.

The changes that will affect TUPE are:

  • Employers with 10 or less employees will now be able to consult directly with the employees about the TUPE transfer, rather than having to consult with elected representatives.
  • Terms and conditions in a collective agreement may be renegotiated one year after the TUPE transfer, provided that the overall changes are ‘not less favourable’ to the employees.
  • Current restrictions on varying employment contracts are relaxed as long as the changes are permitted by the contract (subject to conditions).
  • The time limit for notification of the employee liability information by a transferor to a transferee is increased from 14 days to 28 days before the transfer.
  • A transferee (the new contractor) can begin consultation with the employees before any TUPE transfer, in respect of employees who are likely to be made redundant after the transfer.

However, this is only where the transferor (outgoing contractor) agrees. It will be interesting to see how keen the outgoing contractor will be to allow his competitor (who has just taken the contract from him) to have access to his workforce for consultation purposes before the contract ends! It is difficult to see, in terms of service provision changes, that this will be simpler in practice.

Simplification? We will have to wait and see.

HR Solutions are experts when it comes to TUPE. If you have any pending TUPE please do not hesitate to contact us to ensure that you work to the correct processes.

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