New TUPE Regulations

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Contents
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Overview

The new TUPE regulations came into force on 6 April 2006 – what do they mean for your future business transfers? Find out in this concise Special Briefing.

The old TUPE regulations had become bogged down in confusion and uncertainty. In 2002, for example, in the case of Complete Clean Ltd v Savage (EAT 2002) the Employment Appeal Tribunal stated: ‘The law is in a state of critical UK uncertainty. It is almost impossible to give accurate advice to [those] involved in possible transfers with any degree of certainty.’

And so the regulations on the Transfer of Undertakings (Protection of Employment) (to give TUPE its full title) were revised to address many of the previous uncertainties. They now apply to all business transfers and include long-term business relationships for contracted services.

This Special Briefing will:

  • Deliver comprehensive background to the new TUPE regulations.
  • Ensure you know the circumstances where TUPE can apply, as well as where TUPE will apply.
  • Clarify the impact the new regulations will have on pensions.
  • Update you on the effect of TUPE on HR issues.
  • Provide a summary of the legal implications of TUPE.
  • Detail your obligations to inform and consult.
  • Distil the new legislation into a concise and structured update.

Who should read this Special Briefing?

  • Personnel Directors and Managers
  • Managing Directors and CEO’s
  • In-house legal advisors
  • Professional advisors and HR consultants
  • Venture capital executives
  • All those involved with the acquisition or disposal of a business, the internal transfer of a business or the contracting-out (or back in) of in-house services

Content

1 BACKGROUND NEW TUPE

  • Legislative background
  • Consultation process
  • Major problem areas with the 1981 Regulations

2 CIRCUMSTANCES WHERE TUPE CAN APPLY

  • General application
  • Share saves
  • Joint venturing

3 ASCERTAINING WHETHER TUPE WILL APPLY

  • Two types of transfer
  • Type A – case law transfer
  • Type B – service provision change transfer

4 TUPE AND OFFSHORING

  • Geographical requirements
  • Position before the 2006 Regulations
  • The significance of the 2006 Regulations
  • Position regarding dismissals
  • Possible future amendment to Directive regarding cross border transfer

5 SUMMARY OF THE LEGAL IMPLICATIONS OF TUPE

  • Transfer of employees on existing terms and conditions
  • TUPE dismissals are automatically unfair unless they are for an ETO reason
  • Information and consultation – obligations
  • Obligation on transferor to provide employee liability information
  • Transfer of collective agreements and trade union recognition

6 IMPACT OF TUPEWHO TRANSFERS

  • Regulation 4(1) TUPE
  • Who will transfer?
  • Temporary assignments
  • Secondments
  • Absent employees
  • Dismissed employees
  • The right to object to transfer

7 IMPACT OF TUPE ON EMPLOYMENT CONTRACTSWHAT WILL TRANSFER?

  • Provision within the Directive
  • Provision within TUPE
  • Particular rights that will transfer
  • Case law on what transfers

8 PENSIONS – TUPE

  • Regulation 10(1) – no transfer rights under occupational pension schemes
  • Regulation 10(2) – rights not relating to benefits for old age, invalidity or survivors transfer
  • Provision within the Directive
  • Regulation 10(3) – no constructive dismissal claim as a result of loss/reduction rights under OPS
  • Case law previous provision
  • What pension rights can transfer under TUPE?

9 PENSIONSTHE PENSIONS ACT 2004

  • The position prior to the Pensions Act 2004
  • The Pensions Act 2004

10 INFORMATION AND CONSULTATION UNDER TUPE

  • Overview
  • The new obligation to notify of employee liability information
  • Source of the obligations to inform and consult
  • The obligation to provide specified categories of information
  • The obligation to consult
  • Sanctions for non-compliance with obligations to inform and consult
  • Will liability for failure to inform and consult transfer across to the transferee?
  • Special circumstances defense
  • The decision in Hagen v ICI [2002] IRLR 31

11 TRANSFER OF COLLECTIVE AGREEMENTS AND RECOGNITION

  • Collective agreements
  • Trade union recognition

12 TUPE CONNECTED CONTRACTUAL VARIATIONS

  • Background
  • The new provisions
  • Options open to an employer seeking to vary

13 TRANSFER CONNECTED DISMISSALS

  • Provision within the Directive
  • Provision within TUPE
  • Case law under the 1981 Regulations on transfer connected dismissals
  • Case law regarding “economic, technical or organisational reason”
  • Case law regarding “entailing changes in the workforce”
  • Can the transferor rely on the transferee’s ETC reason?
  • Can a place of work redundancy provide and ETO defence?
  • Litster principle – Regulation 4(3)

14 CONSTRUCTIVE DISMISSALS UNDER TUPE

  • The position under the 1981 Regulations – did TUPE create a wider category of constructive dismissal?
  • The position under the 1981 Regulations – combined impact of right to claim constructive dismissal and right to object to transfer
  • Constructive dismissal claims arising out of changes proposed by the transferee
  • The new provision – Regulation 4(9), 4(10) and 4(11) of the 2006 Regulations
  • The new provision – the practical impact of Regulation 4(9)
  • The new provision – how do Regulation 4(9) and 4(11) interrelate with the right to object to transfer and who will be liable in what circumstances?
  • The new provision – how does this analysis impact on the need for indemnities?
  • The new provision – can Regulation 4(9) be relied upon against transferee following transfer?

15 TUPE AND INSOLVENCY

  • Background
  • Summary provision made
  • Applicability of TUPE to insolvency sales
  • The meaning of “relevant insolvency proceedings” – application to different types of UK insolvency proceeding
  • What statutory liabilities will not pass where the transferor is subject to relevant insolvency proceedings?
  • Some issues arising regarding insolvency variations

16 CONTRACTING OUT OF TUPE

  • Provision within TUPE
  • Case law
  • Contracting out of claims of failure to inform and consult

17 NEGOTIATING A TRANSFER AGREEMENT

  • Background
  • Seller transferor in a business sale context
  • Purchaser transferee in a business sale context
  • Client transferor in a service provision change context
  • Contractor transferee in a service provision change context

18 PUBLIC SECTOR TRANSFERS

  • Background
  • Cabinet Office Statement of Practice: Staff Transfers in the Public Sector (“the Statement”)
  • Annexure to Cabinet Office Statement of Practice: Staff Transfer from Central Government: a fair deal for staff pensions (“Annex A”)
  • Office of the Deputy Prime Minister (“ODPM”) Circular 03/2003 – Annex D Code of Practice on Workforce Matters in Local Authority Service Contracts (“the LA Code”)
  • Code of Practice on Workforce Matters in Public Sector Service Contracts (“Public Sector Code”)
  • Retention of Employment Model (“REM”)

The author

Robert Mecrate-Butcher is a partner in Pinsent Masons’ London employment team. He is very actively involved in advising on TUPE, including both public and private sector outsourcings and in relation to discrimination claims and diversity issues. He heads Pinsent Masons’ national TUPE team, is a member of the ELA working parties on TUPE and age discrimination and has spoken at external conferences on TUPE including for the Law Society Commerce & Industry Group, ILS, IDS and the Industrial Law Society. He is experienced in all aspects of contentious and non-contentious employment law, and has particular experience of acting for major financial service institutions and large corporate clients.

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Certificate of completion

Upon reading this publication participants are invited to undertake a final assessment in the form of an on-line multiple choice paper. Upon passing, a certificate of completion will be made available to you, which can be included as part of your CPD requirements should you consider it relevant to your professional development needs.

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