In November 2011, the Government called for evidence on the effectiveness of TUPE 2006, due to concerns that the regulations were overly complex and that they "gold plated" the Acquired Rights Directive. The Call for Evidence focussed on whether TUPE could be improved or whether guidance and best practice examples could better address the issue. On 14 September 2012, the Government issued its Response to the Call for Evidence on TUPE.
The Response document briefly sets out the key concerns raised by respondents and confirms that a period of policy design will take place, followed by a consultation in due course. Some of the key aspects of the Response are set out below.
Concerns about the service provision changes rules
Respondents expressed a number of concerns around the service provision change rules including:
There was uncertainty about when employees are "assigned" to the group being transferred.
There was uncertainty about whether TUPE applies where activities are fragmented between a number of different contractors. Is there a point where the activities are sufficiently split up to avoid TUPE?
There was general concern that transferors do not take the process seriously and also about the "dumping" of underperforming employees into the outgoing group of employees.
There were mixed views about whether professional services should continue to be covered by the rules. In particular, the advertising sector argued strongly for an exclusion. However, the challenge would be to construct a clear definition of “professional services”.
Harmonisation of terms and conditions
The majority of respondents wanted a provision to be created which would permit the harmonisation of terms and conditions after a transfer. There was concern that the current position creates a two-tier system of employment terms causing an administrative and cost burden. Suggestions on how to deal with this included: specifying a period after which the link with transfer would be deemed to be broken; and/or permitting changes where the employee agrees and where the changes are not less favourable.
Insolvency and liabilities
Generally, respondents wanted greater clarification of how TUPE applied in insolvency situations. There were mixed views on whether this should be by way of legislative amendment or guidance.
There was also concern that transferors were not facing up to their responsibilities for unresolved HR disputes and there was call for the introduction of joint and several liability for transferring liabilities. Indeed, this is the case in certain other Member States e.g. Germany, Netherlands and Hungary.
Interaction of TUPE and other areas of employment law
TULRCA 1992: themajor concern was the way in which the differing consultation requirements interact. Employers felt they could not fulfil any collective redundancy consultation obligations before the transfer had taken place. Trade union respondents have called for the introduction of a rule requiring redundancy consultation to be started by the transferee pre-transfer.
Agency Workers: there were concerns around the requirement to provide employee representatives with details of all agency workers employed by the transferor and not just those working on the activities to be transferred.
Equality Act: there were concerns that the protection of pay post-transfer conflicts with equal pay legislation.
Data Protection: there were concerns that the requirement to provide information about individuals involved in a transfer conflicts with the requirement to protect personal data.
The Response doesn’t say a great deal about pensions, save to confirm that the relevant pensions legislation is under review by the Department of Work and Pensions and that BIS will work with DWP to ensure “joined up policy outcomes”.
Given the considerable delay in its publication, the Response is a little disappointing in that it fails to clearly set out the Government's proposals for the reform of TUPE 2006. The Response does confirm that a Consultation will commence "in due course" which will cover matters such as whether the service provision change rules should be repealed. However, don't expect to see a radical overhaul of TUPE 2006: the Response is careful to note that the regulations are: “highly complex” and the: “scope for change is limited by the requirements of the parent Directive”.