- At Kemp Little, we are known for our ability to serve the very particular needs of a large but diverse technology client base. Our hands-on industry know-how makes us a good fit with many of the world's biggest technology and digital media businesses, yet means we are equally relevant to companies with a technology bias, in sectors such as professional services, financial services, retail, travel and healthcare.
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Government u-turn on TUPE proposals welcomed by outsourcing practitioners
On 5 September the government published its proposed changes to the Transfer of Undertakings (Protection of Employment) Regulation 2006 (“TUPE”), which provides protection for employees in the event of either a transfer of business or on an outsourcing.
In its previous consultation paper, the government had been proposing to remove the “Service Provision Change” test, which was introduced in 2006 to provide certainty that TUPE would apply in the event of an outsourcing, as the government felt that this “gold-plated” the EU legislation.
However the government has made a u-turn on this proposal in its latest response. This is welcomed by outsourcing practitioners, as removal of the service provision change test would only have created further uncertainty and legal cost for those involved in outsourcings. This is because if the service provision change test had been removed, the more complicated “multi-factorial” test would need to have been applied instead. This test involves looking at a wide range of factors and all of the surrounding circumstances, including whether there is a transfer of assets, in order to determine whether TUPE applies. It is very fact-specific and case law in relation to this test can be inconsistent, particularly in an outsourcing context.
The government has also had a change of heart about the removal of the requirement on the transferor to provide “employee liability information” regarding the affected employees. Instead, the government is now proposing that such information must be provided 28 days before the transfer, rather than 14 days at present.
Other changes include:
- Confirming some of the recent changes to TUPE from the case law, including that in order for there to be a service provision change, the activities which are the subject of the outsourcing must be “fundamentally or essentially the same” both before and after the transfer.
- Allowing “microbusinesses” to inform and consult directly with employees, rather than having to elect employee representatives, where there is no recognised trade union.
- Allowing transferees to renegotiate terms derived from collective agreements one year after the transfer (even if the reason for the change is the transfer itself), provided that any changes are no less favourable to employees.
- Enabling the transferee (in certain circumstances) to consult with the transferring employees on collective redundancies prior to the transfer.
The government currently envisages that draft regulations will be put before parliament in December and the new legislation will come into force in January 2014.