FAQ/TUPE – when are post-TUPE contract changes allowed?

As you will be aware, the TUPE rules protect employees when a business or service changes hands. They’re designed to ensure that staff transfer to the new employer with their existing terms and conditions intact. But that doesn’t mean their contracts are untouchable forever. At some point, changes may be possible, so when is that, and under what circumstances? It’s a question we are often asked.

So, for example, let’s say a cleaning company loses a contract and a new provider takes over. The cleaners transfer under TUPE to the new provider, keeping their existing hours and pay rates. Later on, some months later, the new provider might want to align their terms with the rest of the workforce - slightly different shifts and a new bonus scheme. Can they do that? And if so, how? 

On the line from Glasgow to help with that, Anthony Convery: 

Anthony Convery: “A common misconception is that employers can freely change contracts after a certain period following a TUPE transfer - for example after 12 months - but TUPE protections don't have an automatic expiry date. The reality is that employees transfer on their existing terms of employment and any changes that are made because of the transfer are not valid and that's regardless of when they are introduced, whether it's within 12 months, or two years later, any changes by reason of the transfer are not valid changes. 

Joe Glavina: “So when is it lawful to change terms and conditions?”

Anthony Convery: “There are three situations where changes to employment terms are lawful. The first is where the change is unrelated to the transfer. So if the contractual change is part of a wider company policy which affects all of the employees, not just the employees who have TUPE transferred, then the change may be lawful because it's not by reason of the TUPE transfer. The second situation is where there's an economic, technical, or organisational reason entailing changes in the workforce. In practice, this would be a genuine redundancy situation, or a restructuring that changes job roles, or the introduction of new working practices, and employers need to take specific advice as to whether anything that they are proposing falls within that category. Then finally, the change will be lawful where the contract allows for a variation. Employees will transfer on their existing terms and conditions but if those existing terms and conditions include an element of flexibility for the employer, then the incoming employer will have that flexibility and that may allow them to make certain changes. However, where the employees of TUPE transferred employers do need to tread carefully that any changes they make using the flexibility powers don't operate to the employees’ substantial detriment because if that could be said to be the case then there is the risk of a claim.”

Joe Glavina: “What if an employer makes unlawful changes?”

Anthony Convery: “If an employer tries to change contract terms without a valid reason then employees have several legal protections. They can refuse to accept the changes and they can continue to work under their original terms and if their pay or benefits are reduced they can claim an unlawful deduction from wages. And finally, if the change is very significant then they might be able to resign and claim constructive dismissal and all of that means that employers need to approach contract changes cautiously and, where possible, negotiate with employees and offer incentives rather than simply imposing the changes unilaterally.”

We have added this programme to our FAQs series of programmes. To find them just type ‘FAQ/TUPE’ in the search engine of the Out-Law website.