There has already been activity this year in the world of business change, with simplifications to The Transfer of Undertakings (Protection of Employment) regulations 2006 (‘TUPE’) consultation process and an extension to the employment rights of pregnant employees and employees returning from family leave (maternity, adoption, and shared parental leave) in redundancy situations. In addition to these changes the outgoing Conservative Government started a consultation on further potential changes to TUPE regulations which we will explore here.
The purpose of TUPE legislation is to protect the employment rights of employees where there is a transfer of a business (or part of it) to a new employer or where a service transfers to a new service provider. An example, often used in the latter scenario, is when a cleaning contract transfers from one service provider to another and therefore in many cases, the employment of those employees delivering the service transfers to the new service provider at the point the contract transfers.
It is not unusual for business owners and HR professionals to wince at the thought of a TUPE process, often due to the complexities and burdensome nature of it. In January 2024 changes to TUPE legislation simplified the consultation process for small businesses and in situations where a limited number of employees are being transferred. For transfers taking place on or from 1 July 2024, if the employer has fewer than 50 employers or are transferring fewer than 10 employees, they can inform and consult with the affected employees directly, without the need to appoint employee representatives. This only applies where no existing employee representatives are in place; where the same information and consultation obligations will apply.
The business community has long been calling for further changes to TUPE legislation and as a result in May 2024 the Government opened a consultation on proposals to amend TUPE legislation further.
The main driver behind this consultation is to try and remove the uncertainty that has been created by the case law referred to in this document. It is important that businesses can innovate and invest at the same time as protecting the employment rights of those employees affected by a transfer.
Definition of employees
Under TUPE the definition of ‘employee’ (and, as such, who is afforded protection in a TUPE transfer) has been extended due to case law. This has resulted in ambiguity for employers when trying to apply TUPE in practice. The consultation seeks views on amending and simplifying this. Specifically, the first proposal is to make it clear that only employees are protected by TUPE legislation and not ‘limb (b) ‘workers’. Limb (b) workers, most commonly referred to as ‘workers’, are entitled to core employment rights such as holiday pay and minimum wage but they are not afforded the same degree of employment rights as employees usually due to the more casual and less structured relationship between them and their employer.
The judgment in the Dewhurst v Revisecatch Ltd t/a Ecourier case concluded that TUPE did apply to workers. Whilst the decision is not binding, it presents uncertainty for businesses grappling with TUPE processes and who they should apply to in their workforce. The latest consultation is therefore seeking views on amending the existing definition to state that workers are not protected by TUPE.
Fragmentation
In some transfer situations, the business or service is being transferred to more than one new provider or business. The judgment by the Court of Justice of the European Union (CJEU) in the case of ISS Facility Services NV v Govaerts and Atalian NV found that a full-time employment contract could be split across multiple employers when the transfer involves multiple transferees. This creates practical issues and uncertainty. The consultation seeks views on the proposal for transferees to agree who takes which employees in this scenario. Prior to the Govaerts case, the employees would transfer to the transferee taking on the larger proportion of the business or service. This consultation seeks to change this and to consider the practicalities of implementing such proposals.
These proposals seek to reduce the complexity of the TUPE process, reduce the administrative and associated cost burden, and provide clarity for employers and employees in TUPE situations. We await the outcome of the open consultation, which ends on 11 July 2024, to see whether TUPE processes will continue to be streamlined.
If you would like to have a no-obligation discussion about this or another workplace issue you may have please get in touch.
Author: Emily Errington, Associate
