Changes to terms incorporated from a collective agreement


For transfers on or after 31 January 2014, changes to contract terms incorporated from a collective agreement are no longer a breach of TUPE if:


• any variation takes place more than one year after transfer; and 


• the contract terms, when considered together, are no less favourable to the employee than those in place immediately before the transfer.


This change to the law (new regulation 4(5B), TUPE, regulation 6(1) of the 2014 Regulations) does not give the employer a free hand to make changes to collectively agreed terms. Any change must be by agreement. If a union is recognised, that agreement should be reached through collective bargaining. Negotiation can begin at any time, but the change cannot take effect until one year after the transfer date. 


In addition, to avoid a breach of TUPE, any change must be “no less favourable overall”. Otherwise, it will be void and a dismissal for refusing to agree the change will be automatically unfair. 


Only terms “incorporated” from a collective agreement are caught. Many terms with a collective dimension are not “incorporated” from a collective agreement. These include terms fixed by external pay review bodies or derived from custom and practice, employer policies or staff handbooks, or terms incorporated from statutory instruments, even if negotiated by a trade union. The new law may also not cover terms derived from a collective agreement but written out in full in a member’s individual contract terms, or imposed on employees following a failed collective negotiation (see, for example, Cabinet Office v Bevan & Others [2013] UKEAT/0262/13/BA). However, all these examples must be tested in litigation.


An inducement by the employer to employees to abandon collectively agreed terms will infringe section 145B of the Trade Union and Labour Relations Consolidation Act 1992 (TULRCA) which carries a fixed penalty (see Chapter 5). For this kind of challenge to succeed, the employer must offer the inducement wholly or mainly in order to encourage employees to withdraw from the collective agreement. Any challenge must be brought within three months of the date of the offer.


These changes to TUPE are open to attack as an infringement of Article 11 of the European Convention on Human Rights, as well as other international laws and conventions ratified by the UK government to support collective bargaining (see Chapter 5).