Where Are We With TUPE? - Employment Law News Spring 2003

01 April 2003

For more than a decade now TUPE, the law protecting employees on the transfer of businesses, has not only been one of the hottest legal topics, it has had a correspondingly dramatic effect on commerce. This is particularly so in the area of service contracting.

The Transfer of Undertakings (Protection of Employment) Regulations 1981, as fully titled, are awaiting review. Case law and revisions to the underlying EU directive are prompting efforts to clarify when TUPE is to apply, and in what circumstances transfer-related dismissals and agreed changes to terms and conditions of employment might validly be made. During this first half of 2003 we can expect the DTI to run a public consultation exercise on revised draft regulations, with a view to laying them before Parliament later this year and their coming into effect in Spring 2004. We await substantive content. In other areas, early indications are that whilst the revised regulations will oblige transferors to provide transferees with relevant employee information, the current exclusion of occupational pension rights will continue, at least until separately addressed in the Government's Green Paper, "Pensions in the Workplace".

However, businesses contracting with local authorities will be feeling the effect of a new Code of Practice, issued in February, aimed at avoiding the creation of a "two-tier workforce", by insisting that service contracts impose various new obligations on the contractor. Thus, for example, when hiring employees to work alongside staff transferred from local authorities on the provision of certain public services, contractors must engage them on fair and reasonable terms which are overall no less favourable than those of the transferred local authority employees. This will be accompanied by further consultation requirements, and by a demand on contractors to offer a reasonable pension provision to new joiners.

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