Plans reveal U-turn on removing ‘service provision change’ rule
The government has issued its eagerly awaited response to its consultation on Tupe legislation, surprising employers by deciding not to pursue a number of significant changes.
Most notably, the government reversed its position on the proposed repeal of the ‘service provision change’, after listening to feedback from respondents to the consultation on reforming rules governing Tupe (Transfer of Undertakings Protection of Employment).
Concerned that the service provision change clauses – introduced in the 2006 regulations – were too extensive and exceeded European requirements, the government had proposed removing them. However, employers appear to have decided that having clarity and being able to budget for the additional costs of a transfer is preferable to incurring unexpected liabilities.
Only 28 per cent of those who responded to the consultation backed repealing Tupe provisions on service provision changes, compared with 67 per cent who preferred to keep them.
Simon Rice-Birchall, a partner at law firm Eversheds, said: “While bringing certainty in terms of when the regulations apply, service provision changes have also been criticised for increasing costs to business, not to mention being used as an example of the UK ‘gold-plating’ EU requirements.”
“While ‘gold-plating’ is not always contrary to the interests of business, legal certainty and budgeting considerations have taken precedence over any such concerns on this occasion.”
The government has, however, indicated that it will amend the legislation to clarify that in order for a service provision change to occur, the new service provider must carry out “fundamentally and essentially” the same service as before the transfer.
The coalition confirmed that a number of other proposed changes would go ahead, including giving transferor employers a longer period to disclose specified ‘employee liability’ information. Transferring organisations will now have 28 days, rather than just 14, to disclose this information (such as personal details and terms of employment) to the new employer.
The new legislation will also amend the rules so that, where the place of work changes after the transfer, any redundancies due to that change will not be automatically unfair.
In addition, businesses employing fewer than 10 people will be able to consult with employees directly where there is no recognised trade union or other employee representation body.
Where 20 or more people are to be made redundant, the government has indicated that it will amend the legislation so that in certain circumstances, any consultation about job losses that begins before the transfer can count as a collective redundancy consultation.
In a further amendment to provisions for collective agreements under Tupe law, after one year, contractual terms derived from collective agreements may be changed if the reason was the transfer. This is providing the overall change is no less favourable for the employee.
Employment relations minister Jo Swinson said of the proposed changes: “By making these changes we will clear out the cobwebs in some of the rules which will give businesses more clarity about conducting transfers.”
However, trade union body the TUC expressed fears that the revised legislation would water down rights for employees working for outsourced service providers.
General secretary Frances O’Grady said: “The changes could see hundreds of thousands of vulnerable workers lose out on vital protections at work. This is a deliberate attempt to make privatisation cheaper and quicker.”
On the whole, it is thought that the planned revisions should increase certainty in some areas of Tupe, while decreasing bureaucracy in others.
Neil Carberry, CBI’s director for employment and skills said: “Businesses will welcome these changes, particularly the government’s commitment to make the case for EU rules to be clearer about harmonising terms and conditions.”