opinion: an irritant in the tendering process
Wednesday 10 July 1996
The Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) form the English legislative interpretation of the European acquired-rights directive. The underlying purpose of the directive is to ensure that when a business is disposed of as an identifiable unit its employees' rights are protected.
Since the regulations were introduced, the scope of the transactions caught has mushroomed. The regulations were first believed to apply to only commercial ventures. However, the ambit has been widened to include almost any entity which, following disposal, retains its identity.
Although employees are automatically transferred to the new employer on the same terms and conditions of employment, until now it has been thought that the new employer could, with the employees' consent, introduce binding changes to their contracts of employment. A recent decision of the Employment Appeals Tribunal, which followed a European Court ruling, held that where employees agree to changes to their contracts of employment, for a reason connected with the transfer of the venture, those changes will not bind them.
In this particular case the employees in question were deemed by conduct to have accepted changes to their pay structure. However, because the changes had been introduced as a result of a transfer, those employees were not bound and were able to pursue Wages Act claims. The claims related to the reduction in their salaries resulting from the introduction of the new terms of pay.
The ruling will make the rationalisation of a business more complex for purchasers. Changes are often necessary in working practices and pay and benefit structures in order efficiently to integrate the new employees into the expanded workforce. Transferred employees often receive a financial incentive in return for agreeing to such changes. These now appear to be ineffective.
The full implications of this decision may not be apparent for some time. However, it is safe to assume that the indemnities section of most business sale agreements is about to undergo an expansion.
Ian Hunter is an employment law specialist with the City law firm Bird & Bird.
- 1 Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
- 3 Giorgio Armani criticises the way some gay men dress saying 'a man has to be a man'
Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
Katie Hopkins and The Sun editor are reported to police for incitement to racial hatred following migrant boat column
'Jihadi John': Isis executioner Mohammed Emwazi wanted to wage jihad in Somalia until his friends were betrayed and killed by al-Shabaab
Parma, Missouri: 80 per cent of town's police quit after first black mayor is elected
Australian student Tommy Connolly, 23, adopts his pregnant, homeless 17-year-old cousin to give her a chance at 'a better life'
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
£20000 - £25000 per annum + Commission: SThree: Are you great at building rela...
£16000 - £22000 per annum: Recruitment Genius: An SEO Executive is required to...
£16000 - £38000 per annum: Recruitment Genius: Due to continued expansion, an ...
£65000 - £70000 per annum + benefits : Ashdown Group: A long-established, tech...