The UK's DTI has launched a
consultation on draft regulations that will change the
TUPE
Regulations, legislation that regulates employees' rights when the
business they work for is transferred to a new owner.
By amending the
TUPE
Regulations – properly called the Transfer of Undertakings (Protection of Employment) Regulations 1981 – the DTI promises to improve protection for employees and to help businesses by reducing transactions costs.
The Regulations were first introduced to implement the Acquired Rights Directive, adopted by the European Community in 1977 and revised in 1998. The proposed reforms will bring UK legislation into line with the current form of the Directive.
The draft regulations include proposals to:
- improve business flexibility by extending coverage of
TUPE
to so-called service provision charges – service contracting operations, such as cleaning services – so employers and employees know where they stand from the outset of an ownership transfer. This will not apply to services bought in on a "one-off" basis;
- create a "professional business services exemption," so that
TUPE
will not apply to service provision changes involving "white collar" employees;
- increase the transparency of the transfer process by introducing a requirement on the old employer to notify the new employer of any employment liabilities, or face a fine of up to £75,000;
- clarify the circumstances in which employers can lawfully make transfer-related dismissals and negotiate transfer-related changes to terms and conditions of employment for "economic, technical or organisational" reasons; and,
- give a significant boost to the DTI's promotion of the "rescue culture" by introducing new flexibility into the Regulations' application to the transfer of insolvent businesses.
The consultation will remain open until 7th June, with the revised regulations likely to come into effect on 1st October 2005.
