25 October 2013

By Roger Jeary

Roger Jeary reports back on the advice and analysis of experts at the Institute of Employment Rights' latest TUPE conference.

Click here for free downloads of the papers and documents from this event

On 23rd October, a full house of delegates gathered at Unison HQ to hear the latest developments in the TUPE Regulations at the Institute's conference. The Transfer of Undertakings (Protection of Employment) Regulations 2006 – or TUPE as they are better known – were originally introduced to implement the European Acquired Rights Directive in 1981. The intention of the TUPE Regulations was to protect the rights of employees when a business is transferred into new ownership.

The Coalition government consulted on the Regulations earlier this year and published its conclusions in September 2013. This Conference looked at the potential implications of the changes, which are due to come into effect in 2014.

Richard Arthur, Thompsons Solicitors

Richard Arthur, head of Thompsons Solicitors' Trade Union Law Group, kicked off the day by providing a critical analysis of the Regulations looking back over the history of the legislation. In the context of the latest proposals the government has sought to perpetuate the myth that the UK regulations were "Gold-Plated", he began. However, the Directive itself sets minimum standards and principles and it is up to member states to develop the appropriate regulations – this is not simply a social protection law but is designed to balance the needs of employers with those of workers in business transfers. Yet the Coalition's consultation document on the new regulations undermined collective bargaining processes and Richard questioned how this could be reconciled with the EU's Directive.

The outcome of the government's consultation had some bright aspects, including the opposition of both sides of the industry to scrapping the Service Provision Changes (SPC) as the government had planned, leaving the Coalition with no option but to retain them. However, they did manage to slip in one amendment to the SPC, in that facilities must be "fundamentally or essentially the same", which Richard argues will open up a chance for employers to invent innovative ways of providing services to the disadvantage of workers' rights.

Inevitably the government has taken this opportunity to attack trade unions, however, and the main reforms go to the core of collective bargaining – an issue the IER considers to be fundamental not only to workers' rights but to the strength and resilience of the UK economy. One of the expected changes to regulation is that renegotiations of terms derived from collective agreements will be permitted after 12 months following transfer, even when the motivation behind this is the transfer itself. This fundamental principle was further undermined by a decision to adopt a static approach to terms derived from collective agreements, in which awards at the time of transfer are set in stone. This is not only difficult to reconcile with international law, but is also contrary to established case law. Perhaps pointing to a potential motive for this change, this "static" approach would also undermine the national bargaining forum common in the public sector.

The government was provided with the opportunity to adopt this "static" approach following a case led by the Court of Justice of the European Union, which found that a dynamic approach is precluded by the Acquired Rights Directive, Richard explained.

Senior Employment Rights Officer at the TUC Hannah Reed later explained that the TUC has raised concerns about the CJEU decision with the ETUC , arguing that the Directive itself allows for the balance of employees rights against the rights of businesses to restructure and a further lean towards the employer is not in line with these principles.

Richard added that employers are likely to seek to move from collective rights to individual rights after the first year is up and this will be difficult for trade unions to get around. He also argued that this particular change will establish a two-tier system for contractual terms, where they will be variable when derived from collective agreements and unmoveable when they are not. Workers will be denied the right to ongoing pay awards made by their previous national collective agreement.

Richard also anticipates that the current distinction between "by reason of transfer" and "for a reason connected to the transfer" will be abolished when it comes to the circumstances in which dismissals and contractual variations can be made. While this may not have a significant impact on the courts – as they are increasingly inclined to link dismissals to financial difficulties rather than to transfer – it will certainly restrict the scope of TUPE.

Economic, Technical and Organisational (ETO) reasons for dismissal and variations are permitted within TUPE law and Richard believes there will be an expansion in this field to include "location", which will allow employers to simply relocate transferred workers (or dismiss them this is impossible).

Elsewhere, there are proposals to allow pre-transfer collective redundancy consultation to apply to post-transfer redundancies. Richard described this plan as "nonsense and unworkable", and bound to lead to more rapid dismissals following transfer. The results of consultation would no longer be meaningful, he argued, since negotiators would be unfamiliar with the new employer.

Other proposals include the application of the Information and Consultation of Employees Regulations to micro employers (those with fewer than ten employees); and the introduction of an employee liability information deadline, which is of little significance to trade union negotiators as there is no right for the trade union to receive such information.

Whilst the new draft regulations are still awaited it is anticipated they will be laid before Parliament in early December, with Hannah Reed telling delegates that the first draft may be published at the end of October on the Department of Business Innovation and Skills' website and that stakeholders will have a chance to comment.

Unison National Secretary for Business, Community and Environment, Dave Johnson, said the anticipated changes to TUPE are less damaging than anticipated, although there is likely to be an increase in legal challenges following their implementation. He also noted that, from a trade union perspective, the politicisation of TUPE through the government's attacks could help to bolster campaigns against privatisation and outsourcing.

Indeed, he argued that union should focus on organising around TUPE, through the media as well as political and industrial action as potential routes to engendering an inclusive approach with the local community. The trade union official went on to say that he believes lobbying for pre-transfer consultation rights is critical.

Dave also reminded unions that where the outsourced sector is concerned, trade unions have no right to consultation in this circumstance and the outsourcing framework is already determined by the time TUPE is activated. If there is no prospect of resistance to outsourcing the next stage is engagement. As the TUPE process commences, unions need to engage with the bidders as soon as possible. Workplace location plans, potential redundancies, harmonisation, bargaining arrangements and recognition are all key issues to address and he made the point that it is important to have a representative structure to work with the new employer.

Negotiators in all TUPE situations should ensure existing conditions are incorporated into contracts before transfer, and that recognition is extended to cover new starts as well as current employees, he advised.

Christine Haswell, Pensions Officer for PCS, reminded delegates the existing protections for workers with occupational pensions are limited and do not normally cover stakeholder and group personal schemes. It is essential, she continued, to check what pension rights exist in workers' contracts during the process of transfer within the private sector. In the public sector, different circumstances apply, as fortunately the pensions of state employees are carried over with them when they are moved to the private sector, as part of the new Fair Deal. However, trade unions should remain cautious as it is still unclear how this will work in practice; while workers moving in the opposite direction – from private to public sector – will now be subject to a later retirement age of 65.

Hannah Reed told delegates that government has moved to a phase of denying access to justice through employment rights reform, and it is around the issue of restructuring collective rights that government has been most bold. The Coalition's intent is to make it easier for business to undermine rights and bring about change unhindered, she argued, adding that the changes will also make the privatisation of the public sector as well as outsourcing cheaper and quicker.

The main thrust of Hannah's argument was that rather than simplifying the law and the TUPE process, the government's new regulations would actually increase litigation and introduce further complications.

For instance, she believes that amending the SPC will lead to more legal cases being brought when employers begin arguing that TUPE does not apply. Elsewhere, the two-tier approach anticipated by Richard Arthur would also increase litigation, particularly as the new approach to collective agreements may not be in line with the Acquired Rights Directive and human rights legislation. In particular, the proposal to permit collective redundancy consultation prior to transfer is inconsistent with the EU Collective Redundancies Directive, which does not allow for consultation with future employers. The TUC argues that trade unions should be given the right to consult with future employers in transfer situations and opposes the proposal to exclude micro-businesses from consultation requirements where no trade union exists.

She also brought delegates' attention to the fact the EU is currently looking at consolidating directives around collective redundancies, acquired rights and information and consultation. The TUC will question the need for such action and Hannah believes employers are likely to back them on this.

Hannah finally linked the TUPE issues with the EU Public Procurement Directive currently being discussed, explaining that it will include compliance with employment law, and compliance with international labour standards through the tender process and the selection of contractors. This could lead to the outlawing of blacklisting and the TUC will also seek to amend the Directive to reflect trade union involvement.

Click here for free downloads of the papers and documents from this event