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TUPE: is change coming?

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Many organisations hoped that the TUPE regulations would be abolished following the UK’s withdrawal from the EU. Although this did not transpire, the government have launched a consultation on making further changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI/2006/246).

The intention of the consultation is to reduce the complexity and administrative burden for employers “at little to no cost to workers”, and the consultation contains an initial impact assessment.

The proposed changes to TUPE are:

  • To clarify that TUPE only applies to employees, not workers; and
  • To clarify that an employment contract may only be transferred to one employer and may not be split between multiple employers.

TUPE applying to employees only

The definition of employee for the purposes of TUPE is wider than other legislation: “any individual who works for another person, whether under a contract of employment or apprenticeship “or otherwise”, but does not include anyone providing a contract for services”.

However, an employment tribunal ruling in Dewhurst v Revisecatch Ltd (t/a Ecourier) ET/2201909/18 ruled that workers also fell within the scope of TUPE. Although this was not binding on other tribunals, the decision led to uncertainty over the scope of application of TUPE to workers.

The consultation therefore proposes amending the definition of “employee” within TUPE to specifically set out that workers do not fall within the scope of protection of TUPE. The government estimates that only 2.6% of the UK workforce is made up of workers, and therefore only a very small proportion would have benefited from TUPE protection to date.

As part of the impact analysis in the consultation, it is noted that service provision changes are more likely to take place in certain industries (notably cleaning and catering), and employees working in those industries are more likely to be aged 50 or over, male, disabled, from an ethnic minority and/or affiliated with or belong to a religion. The consultation is also therefore seeking evidence on how those with these protected characteristics may be affected by the proposals, and whether that affect would be disproportionate.

Multiple transferees

Following the European Court of Justice decision in ISS Facility Services v Govaerts (C-344/19) EU:C:2020:239, it is currently possible for an employee’s full time employment to be split into two or more parts, and transferred to two or more different entities following a relevant transfer under TUPE. However, there are no provisions in TUPE which set out the governance of how this should be done.

The consultation sets out that this can be impractical where individuals are required to work from multiple locations, and around the practicalities of splitting terms and conditions of an employee.

The proposal is therefore to amend the regulations to clarify that an employment contract can only be transferred to one employer, and not split between multiple employers. The proposal is for the employers taking over the business or service to agree which one of them should be responsible for each employee’s contract. It is not however proposed how this would take place if the employers cannot reach agreement.

There are no statistics in the consultation and impact assessment regarding the number of “split transfers” that take place each year, but it is a rare situation. The impact assessment suggests that employees would benefit as it would provide certainty over their terms and conditions, and would also address practical issues such as splitting annual leave accrual and entitlement between employers.

Therefore, although it remains that there will not be sweeping changes to the TUPE regulations, these smaller issues of concern will likely be addressed, providing further certainty to organisations over the scope of application.