Changes to TUPE legislation and Government consultation

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) provide protection to employees when their employment and associated legal rights transfer to a new employer or service provider, either on a business transfer or a service provision change.

Both the existing employer (the ‘transferor’) and the new prospective employer (the ‘transferee’) are required to provide prescribed information regarding the transfer to all employees who will be affected by the transfer through appropriate representatives (i.e. trade union representatives or employee representatives). If the employer intends to take measures in relation to any affected employees in connection with the transfer, it must also consult with the appropriate representatives with a view to seeking agreement to the intended measures.

Currently, businesses with fewer than 10 employees and no employee representatives, have the flexibility to consult directly with employees. For TUPE transfers on or from 1 July 2024, businesses with fewer than 50 employees and businesses that are proposing to transfer fewer than 10 employees (regardless of the business size), can consult with the transferring employees directly.

The aim of the change is to simplify the TUPE consultation process which will hopefully save time and money for employers. Employers will also have more flexibility and control over the process as they will not need to consult with employee representatives. However, this is only applicable if the business does not already have existing representatives such as trade unions or existing employee representatives.

Government consultation on TUPE legislation

July 2024 will also see the end of the Government consultation period regarding the additional following proposals to TUPE legislation:

• Following an Employment Tribunal decision in 2019 which held that TUPE legislation applied to workers, the consultation will address the uncertainty caused by this non-binding decision to clarify that TUPE should apply to employees only and not workers
• Confirmation that if a business transfers to multiple buyers, any assigned employees must have their employment transferred to one employer

This proposal seeks to simplify the transfer process for businesses and provide clarity where previously, splitting contracts between employers was impractical because it required employees to work between multiple sites and the division of duties across multiple employers which, in practice, was challenging

• To abolish the legal framework for European Works Councils (EWCs) in the UK. EWCs are consultative bodies representing the European workforce of multinational organisations

Following Brexit, the Government sought to prevent new EWCs being established. Although existing EWCs have continued to operate, this was never intended to continue indefinitely due to the costs incurred by businesses who continued to operate an EWC and the fact that existing representatives at company level effectively represented workers in the absence of EWCs.

Considerations for employers

The consultation has not yet ended. However, employers should be aware of the incoming changes to consultation under TUPE legislation and consider the potential impact to their businesses and employees.

If an employer is considering a potential business transfer, sufficient time should be set aside to inform and consult with employees so as to facilitate a smooth transition via open communication about the effect of the transfer on the specific organisation.

Employers should familiarise themselves with their existing and continuing obligations to inform and consult with employees under TUPE legislation. Failure to comply may expose both old and new employers to up to 13 weeks’ gross pay per affected employee.

The consultation outcome is subject to its inclusion in government party manifestos and pending the outcome of the upcoming general election in July. It remains to be seen whether the consultation is continued or if the implementation of the proposals is considered in the next Government’s term.

If you have any TUPE queries or any other employment law issue, please contact a member of our Employment team.