The Transfer of Undertakings (Protection of Employment) (TUPE) is a common business process and one which relies on both HR and the business working closely together to ensure a smooth business transition.
In this Hot Topic we look at recent developments in this legislation as well as how the legislation may further develop under a new Labour Government.
Changes in 2024
On 1 July 2024, part 4 of the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 came into force, introducing changes that relate to consultation.
Prior to 1 July 2024, it was only in very limited circumstances that a business could consult directly with its employees as part of a TUPE transfer process. The previous rules allowed micro businesses (those that employed fewer than 10) could inform and consult directly with employees where there was no existing trade union or employee representation in place.
For transfers taking place on or after 1July 2024, SMEs with fewer than 50 employees that are proposing a transfer of any size, can consult directly with their employees where there are no existing representatives in place. Plus, businesses of any size proposing to transfer fewer than 10 employees can also consult directly with their employees where there are no existing representatives in place.
Future changes
In May this year, under the previous Conservative Government, the Department for Business and Trade launched a public consultation on reforms to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). The consultation sought views from employers, Trade Unions, professional bodies on three proposals:
- reaffirming that only employees are protected by The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)
- removing the complex obligation to split employees’ contracts between multiple employers where a business is transferred to more than one new business
- abolishing the legal framework for European Works Councils.
This consultation was introduced by the previous Conservative Government, so it is unclear what the response to this public consultation would be, by a new Labour Government. In the meantime, here is the detail of the proposed changes:
Reaffirming that only employees are protected by TUPE
In 2019, a significant Employment Tribunal (ET) judgement ruled that “limb b workers” transfer under TUPE as well as traditional employees.
A “limb b worker” is a 3rd party who undertakes to perform work personally under a contract for service and who has a casual employment relationship. Examples of a “limb b worker” includes:
- Freelancers providing regular services but who are not on the payroll
- Agency workers that work temporarily for a business
- Gig economy workers, such as individuals working for companies such as Deliveroo, Uber
- Casual workers, who work on a casual or zero-hour basis where there is no obligation to be provided with work by a company, nor are they required to accept work when offered.
Someone who is an “employee” however, works under a contract of employment meaning they are required to work regularly, be constantly available, cannot unreasonably refuse to do the work, and are provided materials and tools to do their job.
In Dewhurst v Revisecatch Ltd t/a Ecourier, the ET had to consider who was protected and was in scope under the TUPE regulations 2006. The case was brought by cycle couriers who carried out work for the company City Sprint. They brought a claim arguing that when City Sprint lost a contract with a client to Revisecatch, they too should have automatically transferred and were indeed protected by TUPE. The ET concluded that TUPE regulations were to be construed as to include “limb b workers”, because in other areas of protection, they would be protected (the Equality Act 210, the Trade Union and Labour Relations Consolidation Act 1992).
The current consultation looks not only to reverse this decision by making TUPE apply only to “employees”, but it is going to amend the definition of “employee” as currently, it slightly differs to that which is stated in the Employment Rights Act 1996.
Removing the complex obligation to split employees’ contracts between multiple employers where a business is transferred to more than one new business
The consultation also seeks views on the current and complicated position that the contract can be split between multiple organisations when a business transfers to more than one business. This complex position came about following a case at the European Court of Justice (ECJ) in 2020. In ISS Facility Services NV v Govaerts and Atalian NV, the ECJ ruled that a full time contract could be split between several employers when the TUPE transfer involved multiple employees transferring.
Clearly to split a contract across several employers is complicated and can be impractical not just to the various businesses, but to the individual themselves.
Abolishing the legal framework for European Works Councils.
Following the UK leaving the European Union, legislation was introduced that stopped the introduction of new European Works Councils with existing ones being allowed to continue. The proposals set out in the consultation paper now looks to repeal the legal framework that allows these to continue.
What will a new Labour Government do?
As noted previously, the consultation to introduce change to the TUPE legislation was brought in by the previous Government, so it is unclear what the new Government would do with the results following the public consultation.
What we do know however, is that Labour committed in their manifesto to strengthen the existing rights and protections for workers who are subject to TUPE processes.
Further Information
Whilst we await developments in this area, if there is a TUPE situation affecting your business, you will find all our template letters, forms, checklists and guides on the Knowledge Base
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