Changes to TUPE
The Government has issued a consultation on proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006, formulated in response to the ‘call for evidence’ that concluded in 2012. One of the most significant proposed changes is to repeal the ‘service provision change’ coverage, under which contracting out, contracting in and retendering exercises were expressly brought within the scope of TUPE. Other proposals for reform include changing the wording of the restrictions on varying contracts or dismissing in relation to a TUPE transfer, so that these restrictions more closely reflect the minimum requirements of the EU Acquired Rights Directive (No.2001/23).
The proposed repeal of the ‘service provision change’ (SPC) provisions comes in response to business concerns that the Regulations ‘gold plate’ the Directive. The Government notes that it is not clear that the intended benefits of the SPC provisions, such as increased clarity over when the Regulations apply, have been realised. It also accepted evidence that the SPC provisions may have anti-competitive effects, in that transferors may use an SPC as a means of keeping only the employees they wish to retain and transferring those they wish to lose. The Government states that there will be a lead-in period before any repeal to accommodate SPCs currently in preparation.
With regard to the restrictions on varying contracts in connection with a TUPE transfer, the Government has indicated its willingness to legislate to permit post-transfer harmonisation of terms and conditions, but notes that any such change would likely be incompatible with the Directive. Instead, the Government is suggesting that Reg 4 could be amended so that changes by reason of the transfer itself would still be prohibited, but (a) the parties would be able to agree any change that they could have agreed had there not been a transfer, and (b) the parties could still agree a variation for an ‘economic, technical or organisational’ reason (ETO reason).
Other changes include a change to the wording of the restriction on TUPE-related dismissals, similar to that proposed in relation to Reg 4, so that dismissals that are only ‘connected’ to the transfer, and not by reason of the transfer itself, may not be automatically unfair. The Government is also proposing to amend the definition of ETO reason ‘entailing changes in the workforce’ to include changes in workforce location; and to narrow the scope of the right under Reg 4(9) to resign in response to a ‘material detriment’ consequent on the transfer and be treated as dismissed.
Changes to the Cap on Compensation for Unfair Dismissal
On the same day, the Government has published its response to the ‘Ending the Employment Relationship’ consultation.
The most significant change is the confirmation that there is be to cap the compensatory award for unfair dismissal at one year’s pay. The current cap (£72,300) would remain in place, meaning that the effective limit for a successful unfair dismissal claimant would be whichever of the two amounts is lower.
Other Proposals in the Pipeline
The Department for Work and Pensions has announced a new Health and Work Advisory and Assessment Service to be introduced in 2014 providing among other things a state funded occupational health testing for employees who are off for more than 4 weeks.
Other consultations concern the details of the proposed compulsory Early Conciliation via ACAS. Details on this will follow. It is due to come into force in April 2013.