The Government has today published its response to the consultation on proposed reforms of TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006). The main headlines are that both the service provision change test of when TUPE applies and the employee liability information requirement are to be retained.
This service provision change test applies to outsourcing, insourcing and retendering of service contracts. The application of TUPE in such situations was an area of major uncertainty in the period up to 2006 with a large number of contradictory cases making contract negotiations between clients and service providers difficult and protracted. The introduction of the service provision change test in 2006 went further than the European Acquired Rights Directive which TUPE implements in the UK (making it unpalatable to anti-EU politicians). It did however, promise the degree of certainty missing from European legislation which contracting parties needed.
The Government's proposal to scrap the test has been causing concern, particularly where service providers have accepted transferring employees at the beginning of contracts and are concerned that it might be considerably harder to pass employees on to any replacement service provider on termination. That position remains a potential issue in some cases given the disappointingly narrow interpretation adopted by the Employment Appeal Tribunal in some recent cases which has weakened the level of certainty the test was meant to introduce. At least, with the service provision change test left in place, transferors are in a position to influence the application of TUPE through the way they structure their work force.
Also surviving the review is the obligation on the transferor to provide employee liability information to the transferee, ahead of the transfer. In fact this will be improved by extending the time back to 28 days before the transfer (from the current obligation to provide it 14 days before). This statutory due diligence obligation was again introduced in 2006 and whilst in most cases contracting parties will want detailed information at an earlier stage in the transfer process, at least TUPE provides a fall back provision, so this change is again welcome.
There are a number of other more subtle and esoteric changes, but overall it looks like a situation where the responses to a Government consultation actually made a difference!
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