TUPE update: the new regulations, LIVERPOOL

3rd December 2014 – 1:10 pm

Wednesday 3 December 2014

A one-day conference
Adelphi Hotel, Liverpool
9.30am – 3.30pm

Sponsored by Thompsons Solicitors

About the Conference

With recent TUPE updates leaving many uncertain on how the changes will affect trade union activity, the Institute sought to provide delegates attending this TUPE Updated conference with as much relevant information as possible. On the day each attendee received a free copy of Richard Arthur’s report TUPE 2014 published June this year (available here.)

The conference was opened by the chair, IER director Carolyn Jones, who welcomed delegates and acknowledged the latest statutory change to TUPE, which took place in January. The government claimed the new regulations would lead to improvements, making the process of transfer fairer and more effective. However, as Carolyn pointed out, many problems have arisen from the changes and privatisation now seems easier than ever. She noted that the new regulations mainly advantage employers rather than workers – undermining the original intent and ethos of TUPE.

Our morning speaker, Richard Arthur, then addressed conference. Richard’s presentation The New TUPE Regulations: a critical analysis contained contained invaluable information. He began by noting that whilst the Coalition had introduced little in the way of pure trade union legislation, their actions were covertly dismantling trade union rights. The new TUPE regulations were just one example of this.

Richard gave a brief history of TUPE, from its beginnings in 1981 (when a Tory government eventually transposed the EU Directive, The Acquired Rights Directive, into UK law) through its various amendments in 2006, 2013 and more recently, in 2014 (see the government’s( guide to TUPE on its website ). He said it was important in any transfer to focus on two main issues: first, when does TUPE apply and second the effects of TUPE when it does apply.

Richard explained that the question of when TUPE applies is a much contested area of employment law. Privatisation continues and the potential for profit by eradicating previous terms and conditions is huge. TUPE protects terms and conditions so many employers put a lot of effort into arguing that TUPE does not apply.

When TUPE applies, existing terms and conditions transfer to the new employer with the exception of pension rights (Richard informed delegates that he is not an authority on pensions but that there is an informative chapter in his book written by Ivan Walker.) A variation on the terms and conditions cannot occur if the variation is put into place purely because of the transfer. A variation can occur if the reasons fall under the criteria of an economic, technical or organisational (ETO) reason.

In Richard’s analyses of the new TUPE regulations he found that the government has no interest in encouraging good industrial relations. Their changes in relation to pre-transfer consultations and the impact on collective redundancy reflected this. Currently new employers can start consultations about collective redundancy before they become the new employer, a situation Richard found difficult to comprehend and even harder to justify.

In 2013 the government said that they were listening to business concerns, a clear warning that they intended to undermine the original intention of TUPE – the protection of workers’ terms and conditions following a transfer. The government had four objectives. The first was to abolish Service Provision Changes, brought in by Labour in 2006, which brought certainty as to whether or not TUPE applied. The next was to make it easier to harmonise terms and conditions (downwards!) to maximise profit. Third, the government sought to make it easier and faster to dismiss workers through redundancy consultations taking place before transfer. The fourth objective, though never directly stated, was to dismantle collective bargaining by singling out terms derived from collective agreements for special treatment under the new regulations. In general, terms cannot be varied following a transfer but under the new TUPE regulations, collective agreements become frozen at the point of transfer and can be changed after one year. According to Richard, it seems to be this is a blatant attempt to dismantle collective bargaining.

Richard then moved on to talking about standard transfer and service provision changes. A number of cases with exceptional circumstances were mentioned in the presentation, the first being the Print Factory case, dealing with a shares transfer. In that case the transfer of management responsibility was found sufficient for TUPE to apply. He then discussed a second case – Redmond – were TUPE was applicable even though the transfer was a transfer of funding from one substance abuse centre to another. Richard pointed out the similarities of this case to those involving second generation outsourcing.

Richard also discussed cases involving administrative function issues and the matter of economic entity versus activities. He cited the case of Mrs Schmidt to illuminate the problems with these definitions. Mrs Schmidt was the sole cleaner in a German bank whose employment transferred to a new contractor. Mrs Schmidt’s employment continued because she was seen as an ‘economic entity’.

Richard described how the service provision changes now specify asset reliant and labour intensive services, and noted that employee’s activities under a new employer must ‘be broadly similar’.

In the second half of his presentation Richard sought to cover two main areas: ‘What are the consequences when TUPE applies?’ and ‘Who does TUPE apply to?’. A relevant case Richard mentioned was KAV v CORAL where the employee’s duties changed but, as she was not officially assigned to those duties, TUPE didn’t count.

Richard outlined the current effects of TUPE for employees who object to the transfer and looked at issues relating to dismissal. Under TUPE dismissal is deemed unfair if the sole reason for the dismissal is the transfer. ETO dismissals are not deemed unfair, but Richard said that claims shouldn’t have to get as far as considering whether or not there’s an ETO. The definition of an ETO has been expanded, to include location, making it easier for employers to dismiss employees.

Richard also discussed insolvency proceedings – terminal and non-terminal – and outlined the obligations of employee liability information. Under TUPE information is to be provided by the transferor to the transferee, but there is no obligation to make the information available to trade union representatives. Appropriate representatives and affected employees are to be provided information in pre-transfer consultations, which t must now also include ’suitable information relating to the use of agency workers.’

Richard concluded his presentation with a number of points, reiterating the attack on workers in the new TUPE regulations via the pre-transfer collective redundancy consultation and lesser protection on terms and conditions derived from collective agreements resulting in the dismantling of collective bargaining.

After lunch Steve Cottingham from O H Parsons, stepping in for Ellie Reeves, addressed delegates and built on one of the issues raised by Richard in the morning. Steve’s presentation( TUPE – Substantial Material Detriment Claims. Dealt with changes to TUPE over the years that have had an effect on Material Detriment claims. In 2006 TUPE regulations offered protection for workers against dismissal, the protection was there if the dismissal was connected to the transfer and not to any ETO reasons.

Steve mentioned an example from 1981 when privatisation first came about. A construction worker was privatised, but refused to move with his colleague: under 1981 had no rights to unfair dismissal or redundancy if he refused to move but he was able to make a claim for constructive dismissal. Currently if an employee resigns in response to a TUPE transfer they lose almost all the protection that TUPE offers them and constructive dismissal cases do not have a reputation for being very successful.

If an employee doesn’t want to transfer because of a substantial change in working conditions they may be entitled to a substantial material detriment claim. The change must not be trivial, it must be found to be both material and substantial. If an employee can’t find a good enough reason for objecting to the transfer and still objects they will not be entitled to any compensation. An employee is only entitled to compensation if there is material detriment or if constructively dismissed.

TUPE regulations have now been amended to include changes in location as an ETO. This lessens the chances of any employee claims. Fortunately changes in location are still assessed from the employee’s point of view not the employer and are assessed as individual cases not just an overview of employees as a whole. Currently, the rights to a substantial material detriment claim are only triggered by resigning, something that is difficult to recommend to people especially in the current economy.

The rights are only triggered by resigning: something that it is difficult to recommend to people especially in the current economy. The benefits of resigning and claiming may not outweigh the benefits of retaining employment: currently successful claims after resigning receive compensation, very rarely do people ever win reinstatement.

Elizabeth Stephenson from Pattinson and Brewer spoke next with her presentation( TUPE Claims: when is a change substantial and of material detriment.

Elizabeth described how government policy was responding to businesses who didn’t want too many changes as the current TUPE regulations were already more favourable towards them then they are to employees. There has been one amendment to service provision changes in Reg 3(1)(b). It indicates that in order for TUPE to apply the activities must be “fundamentally the same as the activities carried out Previously Elizabeth also commented on the issue of pre-transfer redundancy consultations mentioned by Richard. For collective redundancies there is a minimum period of 45 days consultation. That can now start before the transfer if both the Transferor and Transferee agree. Elizabeth outlined what she sees at the pros and cons of this. The extra time that pre-transfer consultation offers can be both a help and hinder to employees: they can find out what is happening sooner rather than later and explore all their options to build a case, but so can employers looking to dismiss workers.

The next part of Elizabeth’s presentation covered TUPE consultation. A consultation should take place with appropriate representatives long enough before a transfer takes place for the situation to be appropriately assessed with all the necessary information. She then outlined ACAS early conciliation claims and advised the delegates that if you call ACAS to make a claim they’ll just ask if you have internet access and then tell you to do it online. So to save claimants time, she suggested delegates apply to ACAS online. Finally Elizabeth touched on tribunal fees and there effect on TUPE, suggesting that the government was once again limiting access to justice and weakening the protections offered by TUPE.

The final speaker of the day was Hannah Reed of the TUC. Hannah offered an overview from the TUC on the TUPE changes in her presentation Ending the two-tier workforce. She touched on a number of issues including the effects that government policy has had on TUPE, the fact that cuts have led to changes in employment and attacks on employees and she criticised the way changes in the TUPE regulations – not least the freezing of collectively agreed terms and conditions on transfer – undermined the role of trade unions in the workplace. . She also critically commented on the extension of ETO reasons, covering location changes.

Hannah outlined the TUC’S aims for restoring TUPE rights She also discussed the EU Public Procurement Directive, which places more emphasis on employers acquiring the most economically advantageous outcome rather than focusing solely on costs in their business structure. It also included a greater scope for inclusion of social clauses, with public authorities now able to take non-compliance of employment rights and ILO conventions into account when awarding contracts. The UK government’s approach to the EU’s new directive has been lacking, issuing it to local authorities as ‘guidance,’ rather than as mandatory. The TUC says that this is not enough and would like them to take the Scottish government’s approach where the directive has been made mandatory. In conclusion Hannah informed delegates about the TUC’s decent jobs week taking place on 15th to the 21st of December. It is a campaign that aims to raise the profile and awareness of current issues surrounding employment rights. The campaign comes along with the timely tagline ‘what people want for Christmas is a decent job’.


Chaired by Carolyn Jones, Institute Director

Richard Arthur, Thompsons Solicitors
The New TUPE Regulations: a critical analysis


Steve Cottingham, O H Parsons
TUPE Claims: when is a change substantial and of material detriment


Elizabeth Stephenson, Pattinson and Brewer
Two TUPE changes in practice


Hannah Reed, TUC
TUPE changes:an overview from the TUC


Click here to download the full programme