Government announces proposed changes to TUPE regulations and cap on unfair dismissal compensation

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In response to its ‘call for evidence’ which concluded in 2012, the Government has issued a consultation on proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). The proposed changes are:

 

  • The repeal of the ‘service provision change’ (“SPC”) coverage, under which contracting out, contracting in and retendering exercises were expressly brought within the scope of TUPE;

 

  • An amendment to Reg 4 in order to permit post-transfer harmonisation of terms and conditions. Changes by reason of the transfer itself would still be prohibited, however the parties would be able to agree any change they could have agreed had there not been a transfer. Parties could also still agree a variation for an ‘economic, technical or organisational’ reason (“ETO reason”);

 

  • A change to the wording of the restriction on TUPE-related dismissals, (similar to that proposed in relation to Reg 4 above), so that dismissals that are ‘connected’ to the transfer, but not by reason of the transfer itself, may not be automatically unfair; and

 

  • An amendment to the definition of ETO reason ‘entailing changes in the workforce’ to include changes in workforce location; and to narrow the scope of the right under Reg 4(9) to resign in response to a ‘material detriment’ as a result of the transfer and be treated as dismissed.

 

The Department for Business Innovation and Skills has also published the Government’s response to its ‘Ending the Employment Relationship’ consultation which sought views on the implementation of two measures contained in the Enterprise and Regulatory Reform Bill 2012-13 (“ERRB”):

 

  • The most significant proposal is to cap the compensatory award for unfair dismissal at one year’s pay. The current cap of £72,300 would remain in place, so that the effective limit for a successful unfair dismissal claimant would be whichever of the two amounts is lower.

 

  • With regard to the new legislative provision which will make pre-termination negotiations inadmissible in unfair dismissal cases, the Government is planning on proceeding with a new statutory code of practice and accompanying guidance on how to resolve workplace disputes. Acas will shortly publish a draft statutory code for public consultation, with the final code, guidance and the ERRB provision being expected to come into force in summer 2013.

For further advice or information in relation to employment law updates and how they affect your business, please contact Claire Brook by sending an email to claire.brook@aaronandpartners.com or via telephone on 01244 405575.