Varying contract terms in an insolvency

Regulation 9 of TUPE gives a new employer limited freedom to negotiate transfer-related changes to contract terms, for example, cuts to pay or hours, to “safeguard employment opportunities” by ensuring the survival of the business. Any negotiations are likely to take place much faster than normal, under pressure of insolvency.

This special freedom is tightly regulated. In particular:

• where an independent union is recognised, variations must be agreed with the union rep, who is entitled to paid time off to negotiate;

• where there is no recognised union, variations must be agreed with an elected non-union rep;

• variations agreed by non-union reps are subject to the following extra safeguards:

◊ the agreement recording the variation must be in writing and signed by each non-union rep; and

◊ before it is signed, a copy must be given to each affected employee, along with an explanation in writing.

Any variations that is agreed by the representative become part of the employees’ contractual terms and conditions. Minimum statutory rights, such as National Minimum Wage and statutory holiday laws, cannot be breached (see Chapter 4).