10 April 2013

The Coalition's proposed changes to TUPE regulations could make it more difficult for employees to remain on a fair wage when they are transferred to a new employer.The Institute of Employment Rights (IER) and Unison have both submitted strong evidence to the government to prove the unsuitability of its plans.

The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) 2006: consultation on proposed changes, which closes tomorrow, seeks to undermine several key areas of the TUPE regulations. The Coalition reasons that the Acquired Rights Directive, on which the regulations are based, has been "gold-plated" in current regulation, and seeks to simply "copy-out" the wording of the Directive in several areas.

Richard Arthur, Head of Thompsons Solicitors' Trade Union Law Group and author of the IER submission, explains why this reasoning is flawed:

"The Court of Justice has consistently held that the purpose of the Directive is not to achieve a uniform level of protection across the EU. Instead, the objective is “partial harmonisation” . Against this background, it is misplaced for some to speak of the current version of TUPE “gold-plating” the requirements of the Directive," he states.

"What those who use the term mean when they complain that the current version of TUPE “gold-plates” the Directive is that, in certain limited circumstances (and the inclusion of Service Provision Changes is one example), the protections afforded by TUPE may exceed the bare minimum requirements of protection laid down by the Directive. It is a gross manipulation to say that if TUPE exceeds the minimum requirements of the Directive, then that amounts to “gold-plating”. Instead, what is clear amongst these interests is a desire to see the Directive implemented so as to provide for the absolute minimum of employee protection," Mr Arthur continues.

"Notwithstanding the purpose of TUPE and the Directive, it is impossible to identify one single measure in the consultation document which is even claimed to further the aim of safeguarding employees’ rights. This is a set of proposals aimed at benefiting employers and is, as the Impact Assessment acknowledges, likely to disadvantage the low paid (especially women), and those with disabilities," he highlights.

The purpose of the Directive is to protect employees during the transfer of their terms and conditions to another employer, but it is clear the government sees its role as helping businesses to avoid this responsibility.

Mr Arthur quotes BIS's statement that "Prior to the 2006 amendments, it was necessary to establish whether TUPE applied, whereas now advice is often needed to see how TUPE might be avoided, or concerning how its effects might be mitigated". The very idea of helping employers to avoid their duties to their employees goes wholly in the face of the Directive. But this is the reasoning behind the government's main TUPE change proposal, to repeal Service Provision Changes (SPCs).

SPCs have made it easier to identify when and where TUPE applies. introducing much-needed clarity and certainty into the law. There is so much of a consensus on this, that the Coalition's own consultation into the matter in 2012 showed that a majority of respondents were in favour of retaining SPCs. The government thus no clear mandate to remove the provisions and appears to be doing so simply to aid those employers that wish to avoid their responsibilities to their workers.

BIS also quoted employment tribunal statistics as justification for its TUPE changes, claiming that the reforms will reduce the number of cases going through the courts. However, Mr Arthur noted that the majority of the claims making up the data are for unfair dismissal or unlawful deduction of wages and this has not been accounted for in the government's conclusion. It's evidence for a drop in tribunals is therefore extremely weak.

Furthermore, Unison highlighted in its response that the repeal of SPCs will in fact increase the number of employment tribunals necessary to achieve justice, and increase the cost of transfers to the state:

"If SPCs are removed the concern is that litigation around what is or is not a relevant transfer will increase. We could see legal challenges where transferee employers decline to take on the employees or key assets of the entity. This in turn will clog up the Employment Tribunals (ET) and there will no doubt be a number of appeals to the higher courts or directly to the Court of Justice of European Union (CJEU) to seek clarity," the union stated.

"The removal of the SPCs will also increase the costs to the State, where employees are made redundant and rely on the State for unemployment benefits. There is also bound to be a damaging effect on public services which the state will have to step in to resolve," it explained.

Another key change that would hinder workers' rights - and their wages - is the government's proposal to limit the future applicability of terms and conditions derived from collective agreements to one year from after a transfer has been completed. This means that new employers could choose to scrap those parts of employment contracts that derived from collective bargaining by a trade union after 12 months.

Mr Arthur pointed out that it is a bizarre idea to suggest that some explicit terms within a contract can be removed simply because of their source, and suggested that trade unions may respond by favouring short-term agreements over longer ones in case contracts are transferred within the period in which the agreement stands. In longer-term agreements, unions are often happy to concede on certain points for the employer in order to negotiate a deal, but they will be less ready to do so if this change goes through.

In its response to the consultation, Unison added:

"Limiting terms of a contract, which happen to derive from a collective agreement, will run contrary to centuries old common law; to the implied term of trust and confidence; and to Article 11 of the Convention on Human Rights."

"Any such restriction will also suggest that collectively agreed terms and conditions somehow obtain an inferior status to other terms and conditions. Contract law does not distinguish contractual terms in this way. UNISON thinks that this approach is illegal, impractical, and unworkable, and will be seeking to challenge any such change in the courts." it said.

The proposals also seek to make changes to employee liability information, restrictions on changes to terms and conditions and protection against dismissal, economic, technical or organisational reasons for dismissal, duty to inform and consult representatives, micro businesses.

To read and download Richard Arthur's response for the IER in full, please click here

To read and download Unison's response in full, please click here