Improvements to make the process of transferring business ownership fairer and more effective came into force on 31 January, 2014.

Changes have been made to the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), which protect the employment terms and conditions of employees who are transferred from one organisation to another. The regulations have been improved to make sure both employers and staff are treated fairly when a transfer takes place.

Under the new regulations:

• Businesses will now be able to renegotiate terms and conditions in collective agreements one year after a transfer has taken place, provided that the overall change is no less favourable;
• Micro businesses will be able to inform and consult employees directly when there are no existing appropriate representatives (under existing TUPE regulations businesses usually have to inform, and sometimes also consult, employee representatives such as trade union representatives).  For micro businesses with 10 or fewer employees there are often no representatives which means that they have to be specifically elected for this purpose, so this change will make the process much less bureaucratic;
• The new employer will be able to engage in pre-redundancy consultation with employees, with the consent of the old employer;
• Contractual changes will be permitted for economic, technical or organisational reasons with the agreement of the employee and, or where, a contractual right of variation exists.

The regulations also clarify the existing law in a number of areas:

• In cases where employees’ terms and conditions are provided for in collective agreements, only the terms and conditions in the collective agreements that are in place before the date of transfer will apply. Any future changes will not bind the new employer unless it has taken part in the bargaining process that brought about the changes;
• The test for service provision changes will make clear that activities carried out after the change in provider must be fundamentally the same as those carried out by the previous person who has ceased to carry them out.  This means that if businesses radically change the way they provide services, that change is unlikely to be subject to the TUPE regulations.

Employment Relations Minister Jenny Willott said: “When a business is transferred from one company to another we want to make sure that TUPE continues to provide appropriate levels of employee protection, whilst making the process as smooth as possible for the businesses involved.  Making these changes will give businesses more clarity about conducting transfers and provide them with the tools to create new opportunities in the UK labour market, whilst protecting fairness for all.”

Updated TUPE guidance can be found at www.gov.uk/transfers-takeovers.

Image:  Jenny Willott