Varying contract terms in an insolvent administration

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, owing to the 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 a duly elected non-union rep;

• variations 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 agreed by the representative become part of the employees’ contractual terms and conditions of employment. Any new terms must not breach minimum statutory rights, such as the national minimum wage (see Chapter 4).