Government announces improved rights for transferred employees

On February 14th the Government announced plans to take forward the long-awaited reform of TUPE. Although the announcement provides little of substance it shows that the Government is now actively considering TUPE. Draft revised regulations are to be made available for public consultation in the first half of this year. It is anticipated that these will come into effect in Spring 2004

The first concerned new measures to deal with public sector contracting. See article End of two tier workforces in public sector contracting out and the other concerned TUPE.

According to the press release, the revisions will, amongst other things:

1. Ensure that TUPE applies more comprehensively to contracting-out involving labour-intensive services such as office cleaning, catering, security guarding and refuse collection (while leaving unaffected the position of professional services, such as accountancy, consultancy and legal advice).

2. Introduce a requirement on the transferor to notify the transferee of the employment liabilities he will be transferring, thus increasing the transparency of the transfer process.

3. Clarify the circumstances in which employers can lawfully make transfer-related dismissals and negotiate transfer-related changes to terms and conditions of employment for "economic, technical or organisational ("ETO") reasons.

4. Introduce new flexibility in relation to the transfer of insolvent businesses, giving a significant boost to promotion of the "rescue culture".

The Government's stated aim is to support business flexibility and restructuring and help "take the fear out of transfer for those affected".

The DTI has also confirmed that the issue of the coverage of occupational pension rights under TUPE is being considered separately and to a longer time-scale as part of the pensions review currently being taken in the Government's Green Paper, "Simplicity, security and choice: Working and saving for retirement" published on 17th December 2002. Therefore the most complex and controversial area of reform is being delayed.

Nearly all of the broad issues raised in the Autumn 2001 consultation paper appear to be covered, but we shall have to wait for the draft legislation to see what will actually become law.

If you have any queries about TUPE or how the changes may affect your business please contact Simon Jeffreys at [email protected] or on +44 (0)20 7367 3487 or Anthony Fincham at [email protected] or on +44 (0)20 7367 2783 or Alex Green at [email protected] or on +44 1224 622022