TRANSFER OF UNDERTAKINGS (PROTECTION OF EMPLOYMENT) REGULATIONS
Is TUPE doing the business?
TUPE the Transfer of Undertakings (Protection of Employment) Regulations is a piece of legislation that protects your terms and conditions of employment if the responsibility for the work you currently do is taken over by another employer. Employees of the previous owner when the business changes hands automatically become employees of the new employer on the same terms and conditions. In short, its as if their employment contracts had originally been made with the new employer. The legislation gives specific protection to: length of service; salary and hours of work
The terms and conditions detailed in your contract of employment including for example, your holidays Any collective agreements (for example your pay scale)
The TUPE legislation excludes protection for your pension. However, if you were employed by Local Government and you transfer to another employer there is separate legislation which will protect your pension. The TUPE legislation also places an obligation on your current employer and the employer you will transfer to, to consult with you about the changes. And TUPE protection is not time limited. This means that your terms and conditions remain protected whilst you remain in the job that has transferred. So for employees TUPE is important. For employers though it is double edged. Indeed it has been described as thorn in the side of all lawyers and companies involved in mergers, acquisitions or indeed outsourcing. A survey found that 77 per cent of employers had difficulty in deciding when Tupe applied. When it did apply, 77 per cent of employers highlighted difficulties with matching terms and conditions of employment and 81 per cent complained of difficulty in changing terms and conditions. The figures also showed that 20 per cent were in fear of equal pay claims from their existing workforce, who might compare themselves to transferring employees with protected terms. And 55 per cent of employers recounted difficulties in the pensions field. It is clear that TUPE experts are unlikely ever to go out of business. In a recent article, Camilla Cavendish of the Times related a story about TUPE. A London neighbour of hers ,she called Mr B, ‘ runs a small business that is doing well. Last year he took over an insolvent company where the staff were about to lose their jobs. He was amazed to discover that under the 2006 TUPE regulations, he could not change the contracts of any of the staff if he took them on, although they were paid more, had longer holidays and different hours from the people who were already working for him. If he took on Mary in customer services, he would have to pay her more than his longtime faithful employees Mabel and Sue. But if he didn’t take on Mary, he would have to justify, under redundancy law, why he was jettisoning her, instead of Mabel or Sue. He had to pay off Josie, Mary’s colleague who had worked only a few months before taking a year’s maternity leave, even though she would have received nothing if the company had gone bust.’ Mr B understandably perhaps almost gave up .Cavendish said that in many ways it would have been easier for Mr B to stay small rather than to double the size of his company. In the end he did hire most of the new staff for which they were grateful. But it has cost him thousands of pounds in legal advice, and in paying the new staff more. And now, because of the TUPE rules, he fears that he has fallen foul of Harriet Harman’s Equality Act, which says that people should be paid equally for doing the same job. Only a politician, Cavendish concluded, could have created such a Catch 22.
Another way of putting it is that TUPE, while sound in principle, and protecting sometimes vulnerable employees, has had unintended consequences and rests uneasily with any attempts to reform public services , acting as a constraint and drag anchor on the development of the supply market, while deterring, also, companies from effecting rescues of other potentially profitable companies, and others from pitching for public service contracts and can mitigate against job creation. Last November the Government said it had no intention of revisiting TUPE but, if it doesn’t , it is hard to see how its proposed reforms for public services that will be published in a White Paper shortly can possibly work.
Significantly, perhaps, today the Times in a Leader calls for TUPE to be revisited saying ‘It (the government) will find, in due course, that in education, health and welfare in particular, the new suppliers are scarce, even when services are opened up to competition. The regulatory barriers need to be removed.’