As we reported on Tuesday, the Government has concluded two post-Brexit consultations on reforming holiday pay and TUPE and has published its responses along with draft regulations dealing with those areas.
In summary, the changes include: (1) A reduction of time-consuming reporting requirements; (2) The simplifying of annual leave and holiday pay calculations under the Working Time Regulations; and (3) The streamlining of the TUPE regulations that apply when a business transfers to a new owner.
That streamlining of TUPE amounts to a relatively minor change to the consultation arrangements for small TUPE transfers, allowing businesses to consult directly with the affected employees and, whilst it is welcome, TUPE expert Gill Ross told this programme she thought it was a missed opportunity to make a number of much-needed wider reforms. In particular, she picked out the lifting the restrictions on changing terms and conditions after a TUPE transfer to make it easier to harmonise the terms of staff across the workforce. Also, she talked about easing the problems caused by the ECJ’s ruling in Govaerts which allows the employment contract of transferring employees to be split between two or more employers. That, Gill said, has led to a lot of uncertainty for employers around sorting out the terms and conditions of employees across the various employers – as she put it, ‘it causes havoc’ in practice.
So, those are two of the missed opportunities but there a number of other TUPE changes we would have liked to see but which don’t appear in the draft regulations. The government did invite stakeholders give their views on this. Question 20 of the consultation paper asked respondents about their experience of the TUPE regulations and changes they would like to see. There were 312 responses which the Government says they will bear in mind for the future.
So what changes would we like to see? Gill Ross again:
Gill Ross: “Yes, there were a couple of other items, and one is particularly simple, I think, that they could have rectified. There is a requirement currently for regulation 13 letters to contain certain prescribed information. So, that’s the letter that goes to employee representatives setting out the TUPE transfer and the implications of it. There is a requirement to provide agency worker information as part of that letter and it’s something that employers quite often overlook and can result in a technical breach of the regulations and a protective award claim and some of our clients have been caught out with that, in the past, particularly, really have a trade union present. So, they could have removed that particular requirement. It’s a requirement in collective redundancy as well and it makes sense because you'd want to understand the whole workforce and the agency worker population that you have there, but for TUPE transfers it's really not relevant. So, I think that's an easy one that they could have just put a red line through and dropped that particular requirement.”
Joe Glavina: “Another one they’ve left out is the mismatch between penalties for a failure to collectively consult in the two regimes. So, for TUPE it’s 13 weeks' pay, whereas it's 90 days' pay for redundancies. They could be aligned.”
Gill Ross: “Yes absolutely, that’s an easy one they could have rectified. I've never quite understood why they have the difference between the two and, frankly, I always forget which one applies to which regulations but, yes, that's a simple one, they could have aligned those quite easily and made it the same time periods. The other one that's a bit more complicated the redundancy situation and the requirement for an ETO reason because, at the moment, an outgoing employer can't rely on the incoming employer’s ETO reason so what can happen is it sort of artificially delays redundancies taking effect. So, just to paint a scenario here, if you've got a client in the UK who is outsourcing services to a new provider for the first time and it's going offshore, if they're they know that there are going to be redundancies, a place of work redundancy, what they don't want to do, usually, is outsource and transfer all their employees over who may have been with them for a long time, transfer them over to a foreign, incoming, employer who would then carry out the redundancy process. They would want to carry that out themselves and deal with their own employees. To ensure that they are protected and there are no claims against them or against the new employer they have to enter tripartite agreement so you end up with this really complicated structure to avoid any claims because it would be an automatically unfair dismissal if they made those employees redundant pre-transfer. So, there could have been a bit more thought around how draft legislation that correct that issue and makes it simpler but I think, again, that's another area where the government could have put some thought into it and taken a more commercial approach to actually what happens in practice and made it simpler for redundancies to be effective in a TUPE transfer because it's often not in an employee’s interest, they know there's going to be redundancies and they might prefer their own employer, who they know, to deal with that rather than transferring over and being made redundant within a week or two.”
Joe Glavina: “Another one is the mismatch when it comes to settling claims about collective information and consultation obligations under TUPE. So, that difference between the COT3 approach and the settlement agreement approach.”
Gill Ross: “I think it would be helpful. At the moment, one of our standard claims that we can waive is the right to enforce a protective award, but you can’t actually waive the right to claim a protective award so that’s difference between what can be included in a settlement agreement, but they can't be settled via a COT3. So, there's that disparity there. I don't know why there's a difference. A COT3 entered into without the employees receiving any legal advice, but with a settlement agreement they would receive legal advice, so, I think that that would be another common sense change that settlement agreements can be used to waive the right to bring a protective award claim.”
Joe Glavina: “Finally Gill, there was an opportunity to restrict TUPE to employees and exclude ‘workers’ who were never meant to be protected but are in the frame by virtue of EU law.”
Gill Ross: “Yes, there's been some case law over the last couple of years on that, the Dewhirst case, confirming that the wider definition of employees extends to what we call ‘type-b’ workers. So, it gives them additional protection under TUPE in terms of they have the right to be informed and consulted but, of course, they don't have the same protections that employees have against unfair dismissal, etcetera. So, I think, given the main aim of TUPE is to protect employees’ employment, and to protect their terms and conditions, that doesn't really apply to workers to the same extent in that they're not employed so they can't be unfairly dismissed, but also the terms and conditions point. So, yes it would have made sense to just go with the commonly understood definition of employees for actual employees and not those who are workers and that wider group that TUPE currently captures.”
Those are some of the changes we would like to see to the TUPE regulations. The other two big changes – making it easier to harmonise terms and conditions post-transfer and tackling the problems caused by Govaerts – are ones we covered earlier in the week in our programme ‘UK Government to legislate on changes to TUPE consultation duties.’ If you’d like to watch that programme you can – we’ve put a link to it in the transcript of this programme.
LINKS
- Link to HRNews programme: ‘UK Government to legislate on changes to TUPE consultation duties’
