More Changes to TUPE Regulations Proposed

The government has published a second consultation in its employment law reform regarding further changes to TUPE Regulations. They clarify who is entitled to benefit under them and how employees will transfer when multiple parties are involved.

This comes after two recent cases that have caused confusion for organisations. Read on to learn more about what the TUPE Regulations do and the proposed changes to employment law.

Government Proposes Changes to TUPE Regulations: Who Will Benefit?

One of the proposed changes to TUPE Regulations is to elucidate to whom they will apply. Confusion on this point resulted from the case of Dewhurst v Revisecatch Ltd t/a Ecourier (2019). In this case, an Employment Tribunal decided that the TUPE Regulations applied to “limb (b) workers” as well as employees.

Whilst the judgment was not binding (being only an Employment Tribunal decision), it effectively caused some uncertainty around the point. This was intensified by the fact that the definition of “employee” in the TUPE Regulations is slightly different to that in the Employment Rights Act 1996.To date, it has been understood that the TUPE Regulations apply only to employees.

The Department for Business and Trade has confirmed that this should be the position going forward as well. They further added, “Amending the definition of ‘employee’ in the TUPE Regulations will address the ambiguity around the question of whether limb (b) workers are covered by the TUPE Regulations. This will provide helpful clarity for businesses undertaking TUPE transfers where workers are involved.”

Transferring to Multiple Locations is Impractical and Problematic

The second amendment seeks to explain the position if more than one organisation is involved in an acquisition. In such a case, each employee of that business should transfer to a single new employer as opposed to their employment contract being divided between various organisations.

The organisation to which each employee will transfer must be decided between the acquiring organisations in advance, although it is not clear what will happen if a decision cannot be reached.

In ISS Facility Services NV v Govaerts and Atalian NV (2020), it was held that a full-time contract of employment could be divided between more than one employer if a TUPE transfer involves more than one transferee (i.e. purchaser). This caused uncertainty about this element and contradicted previous understandings of the position, leading to potential changes to TUPE Regulations.

The Department for Business and Trade has suggested that such a division of employment contracts would be impractical if multiple locations were involved. Moreover, the split of terms and conditions between different employers may also prove problematic. Additional changes to employment law were therefore considered necessary to avoid any such challenges.

Is This the End of the European Works Council’s Legal Framework in the UK?

European Works Councils (“EWCs”) are consultative bodies which represent the employees of multinational organisations across Europe. After Brexit, the government introduced legislation preventing the establishment of any new EWCs but allowing the preexisting ones to continue their operations. However, now, the government is considering revoking the legal framework enabling the function of existing EWCs, necessitating further changes to employment law.

Some businesses have voiced approval of this proposed change, citing the complications of attempting to utilise EWCs in a single country, when their purpose was to facilitate cross-border engagement. Since Brexit, some organisations have sought to disband their EWCs in the UK. This is due to the cost of having to operate two separate EWCs: one in the UK and one in the EU. To date, courts have upheld the UK EWCs’ right to carry on their operations, but this may be about to change.

The consultation purports to abolish existing EWCs in the UK, with the Department for Business and Trade stating that “we believe that existing structures can effectively represent workers at company level in the absence of an EWC, such as unions or other employee representatives.”

What Is TUPE?

TUPE, or the Transfer of Undertakings (Protection of Employment) Regulations 2006, protect the rights of employees and govern their transfer from one employer to another when a business is sold.

In the simplest of these scenarios, after the existing employer sells its business to a third party, and the employment contracts of that employer’s employees will pass to the third party along with the business. This makes the third party the employees’ new employer.

In more complex examples, an employer’s workforce may comprise a mixture of employees and workers, and/or the business may be acquired by more than one-third party. In such cases, the correct process for TUPE transfers becomes correspondingly more complicated. Thus, requiring additional clarification by changes to TUPE Regulations.

In this most recent consultation, the government is requesting views on the effects of Dewhurst v Revisecatch Ltd, on employers and workers. This is particularly regarding the prevalence of split transfers, and practical considerations which these may cause. The consultation will run until 11 July.

If you have any questions about the TUPE Regulations or if you are involved in a TUPE transfer, contact Redmans Solicitors today for a free initial consultation. Our team of approachable specialists will be delighted to discuss your query and find out how best to help.