The Transfer of Undertakings (Protection of Employment) Regulations 2006 (Tupe), the UK law which implemented the Acquired Rights Directive into UK law, require that an employer acquiring the employees and possibly workers of another must honour their terms and conditions, including holiday, pay and other benefits, with very limited exceptions.
While Tupe protects transferring employees, it can also create management issues, because one group of employees will have different benefits from the others and these differences can be significant.
Generally, prior to any transfer, the employer must consult with employee representatives about the transfer and give the representatives certain prescribed information. If there are to be changes to any benefits which cannot be replicated by the new employer, this would form part of that consultation.
In May 2023, the last government consulted on these consultation obligations and some limited changes were adopted and came into force on 1 July 2024. These changes are implemented by the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (SI 2023/1426).
They simplify the process to be undertaken by an employer, sometimes referred to as a micro employer, transferring fewer than 50 employees, or where the transfer is by a larger employer but only affects fewer than 10 employees. In such circumstances, the employer can consult directly with the employees without the additional layer of having to elect representatives and then consult with them. It is important to note that if 10 or more employees are affected, even if fewer than 10 are transferring, the requirement for consultation with employee representatives will remain. Where a standing body of representatives exists before the proposed transfer arises, there will still be a need to consult with them, rather than directly with the workforce, even under the new law.
The practical impact of this change is for smaller businesses which transfer their employees. Where a business has good relationships with all employees, they are likely to take advantage of this change. However, even some micro organisations may decide it is easier to consult with one or two representatives, rather than with each individual employee, especially if they think a particular individual may be difficult to deal with.
In May, a further consultation was launched by the last government to look at some additional issues, including clarifying ambiguity that has arisen from European Union case law, as to whether Tupe applies to workers, or only to employees. That consultation ended on 11 July, and it remains to be seen whether any recommended changes arising out of that process will be adopted by the new government.
Merrill April is a partner at CM Murray
