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, even if there is no ETO reason, provided:


• 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.



(regulation 4(5B), TUPE, and regulation 6(1), CRTUPEAR 14)


This change to the law does not give the employer a free hand to make changes to collectively agreed terms. Any change must be by agreement. Where a union is recognised, that agreement should be negotiated through collective bargaining. Although negotiation can begin at any time, the change must not take effect until one year after the transfer date. 



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, for example: 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. All these examples would need to be tested in litigation.



An inducement (such as a one-off cash payment) by the new employer to transferred employees to abandon a collectively agreed term after the transfer would infringe section 145B of TULRCA, which carries a fixed penalty (see page 147 of Chapter 5).


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).