Changes to individual contract terms

Changes to individual contract terms are void if the sole or main reason for the changes is the transfer, unless it is a valid economic, technical or organisational (ETO) reason entailing changes to the workforce (regulations 4(4) and 4(5), TUPE, as amended). What amounts to an “economic, technical or organisational reason” and a “change to the workforce” is explained below.

“Harmonisation” of individual contract terms (that is, cutting pay or other terms and conditions on a transfer simply in order to bring them into line with those of the employer’s existing workforce) is against the law. There is no valid ETO reason for this kind of change.

An employer can impose a change without infringing TUPE if the employment contract already contains a valid express contract term that allows this (for example, a contract term that permits “reasonable” unilateral changes to terms and conditions). A change that relies on this kind of contract term can be made without infringing TUPE, whether or not there is a valid ETO reason justifying the change (regulation 4(5)(b), TUPE, as amended).

There is a limit to the extent to which an ET should allow employers to impose unilateral changes to terms and conditions in reliance on this kind of term. This is explained in Chapter 3 and in LRD’s new legal guide to defending terms and conditions.