Transfer of Undertakings (Protection of Employment) Regulations 2006 - Contents

Contents

1. Citation, commencement and extent

2. Interpretation

3. A relevant transfer

• this takes on the Spijkers language of whether an entity retains its identity, r.3(1)(a)
• the definition of economic entity as an 'organised grouping of resources' comes from Suzen too, r.3(2).
• it also now applies explicitly to a 'service provision change', i.e. contracting out services. An example of this case is RCO Support Services, r.3(1)(b)
• the regulations make clear that a service which is merely performing a 'single specified task' does not fall within TUPE, r.3(3)(a)(ii)
• the definition of an undertaking, to which the regulations apply as something engaged in economic activities, whether public or private, comes from an EC competition law case called Höfner and Elser v Macrotron GmbH, 'Höfner and Elser v Macrotron GmbH ECR I-1979 r.3(4)(a)
• a new exception is that an 'administrative reorganisation of public administrative authorities' will fall outside TUPE's scope is still unknown in its effect, r.3(5)

4. Effect of relevant transfer on contracts of employment

• the core of this law, r.4(1) provides that employment contracts 'shall have effect after the transfer as if originally made between the person so employed and the transferee'. So new business buyers cannot escape the old business' obligations to its workforce
• it also points out that to fall within the protection of TUPE, you had to have an employment contract "immediately before the transfer", r.4(3). This was the issue in Litster v Forth Dry Dock ICR 341, where a relaxed and purposive interpretation was given. So, "immediately" can really mean a while, with wiggle room.
• in r.4(4) it says that variations of employment terms 'shall be void' if the main reason is the transfer itself or 'a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce.' In r.4(5) it is emphasised that employees and employers can agree to change terms where this is not the case. The normal rule is that even consensual agreements are void.
• where an employee objects to the change in the identity of the employer, then r.4(7) states he will not become one. He is to be treated as if his contract terminated when the transfer takes place, but that he is not dismissed (unless of course the employer actually does dismiss him), r.4(8). This issue came up in Wilson v St Helens Borough Council 2 AC 52;
• where the contract is varied detrimentally on transfer, employees can treat themselves as dismissed by the employer. In the Humphreys case (University of Oxford v Humphreys (1) and Associated Examining Board (2) ICR 405, Court of Appeal) it was decided that an employee who resigns on or before a TUPE transfer because of well-founded fears that the new owner intends to impose worse terms and conditions of employment than those provided by the original owner can claim constructive wrongful dismissal against the original owner. Also the Tapere case ruled on the interpretation of mobility clauses, and where a relevant transfer involves a substantial change in working conditions which is to the employee’s material detriment, held that "detriment" should be considered using the subjective approach which applies in discrimination law.

5. Effect of relevant transfer on collective agreements

6. Effect of relevant transfer on trade union recognition

7. Dismissal of employee because of relevant transfer

• states that employees will be considered dismissed unfairly, if they are dismissed without the employer showing an economic, technical or organisational reason for dismissal. What is certainly not included in this concept is dismissals simply to improve the price of the company before its sale.
• where there is an economic, technical or organisational reason for dismissals, these are considered 'substantial reasons' (i.e. justified reasons) under the fair dismissal provisions of the Employment Rights Act 1996 (s.98(2)(c)). The result for the employee is that he is considered redundant, and thereby should receive a compensation payment if they have been an employee for more than two years under s.135 ERA 1996.
• importantly, an employee dismissed by the seller of the business is deemed to have been dismissed by the purchaser too. This means an unfair dismissal claim can be brought against either party.

8. Insolvency

9. Variations of contract where transferors are subject to relevant insolvency proceedings

10. Pensions

11. Notification of Employee Liability Information

12. Remedy for failure to notify employee liability information

13. Duty to inform and consult representatives

14. Election of employee representatives

15. Failure to inform or consult

16. Failure to inform or consult, supplemental

17. Employers' Liability Compulsory Insurance

18. Restriction on contracting out