TUPE reform under spotlight as UK government launches call for evidence

The Department for Business and Trade opened the call for evidence earlier this week as it looks to canvas views from a broad spectrum of employers and workers on the effectiveness of current TUPE rules and protections for employees.

The move is the latest step in the administration’s ongoing efforts to reform employment rights, following the passing of the Employment Rights Act late last year.

• Read more: What the Employment Rights Act means for you

The government also asks how clear it is whether the TUPE regulations actually apply, and if there is a ‘relevant transfer’ of employment.

Anthony Hollands, an employment law expert with Pinsent Masons, said this would allow businesses to highlight the impact of a lack of clarity around the issue.

“This is one of the most practically significant questions in the call for evidence,” said Hollands.

“In practice, whether a transaction constitutes a relevant transfer, particularly in the context of service provision changes, is often disputed and generates significant legal costs and uncertainty for businesses.

“Employers should use this opportunity to raise concrete examples of where the current definition creates ambiguity or unintended consequences.”

The wide-ranging questions come as the government looks to encourage growth, potentially through making merger and acquisition processes easier, developing a better environment for businesses to expand – while at the same time ensuring employees have a real say in the transition process and their rights are protected.

Under the current TUPE regime, a new employer takes over employment contracts – including previous terms and conditions, union recognition, continuous employment and collective agreements, among other terms - when a business transfers to a new employer or there is a change in service provider.

The new employer cannot easily change an employee's terms and conditions if the reason for doing so is the transfer itself. Changes are permitted only for economic, technical or organisational (ETO) reasons involving changes in the workforce or workplace. The government seeks views on whether that should change.

Among the areas being explored by the call for evidence is whether the current TUPE regime strikes the right balance between employer needs and employee protections around the restrictions on varying terms and conditions.

Participants are asked if the ETO circumstances – such as cost-saving requirements, reorganisation or new work processes that entail changes in the workforce, or when changes improve terms and conditions for employees – are appropriate and clear.

Nigel Cousin, an employment law expert with Pinsent Masons, said the ETO issue was often one of the most commercially impactful and frequently problematic aspects of the regime.

“Employers should engage carefully with these questions, as there is widespread frustration in practice with the inflexibility of the ETO regime and the difficulty of harmonising terms across a transferred workforce,” he added.

The government said in the call for evidence: “We know that TUPE provides vital protections for employees when they are moved between or within companies and other organisations, for example when one company buys out another.

“By updating TUPE regulations, we can support growth through facilitating smoother mergers and acquisitions. This will help create the right environment for businesses to expand and support a stable workforce during transitions.”

The call for evidence runs until 1 July.