5. THE EFFECT OF TUPE ON TERMS AND CONDITIONS

The basic purpose of TUPE is to protect employees’ terms and conditions when their employment transfers to a new employer. This is achieved by treating the existing employment contract as if it was made with the new employer (known as the transferee). This effect of TUPE on the employment contracts of transferring employees is automatic and cannot be contracted out of. The relevant regulation of TUPE for this purpose is Regulation 4. The new employer cannot pick and choose which employees to take on.

TUPE preserves continuity of service, which runs from the date employment began with the old employer.

Regulation 4 of TUPE has been changed in several important ways by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (the 2014 Regulations). In general, these changes make it easier for a new employer to change contract terms after a transfer, especially where those terms have been negotiated by a trade union.

The 2014 Regulations only affect transfers on or after 31 January 2014 — the date on which the changes to TUPE become law. In practice, reps will still need a broad understanding of the old law (pre-31 January 2014) for some time to come. Because TUPE protection lasts indefinitely, there will be two different levels of protection as a result of these changes, depending on whether the transfer took place before or after 31 January 2014. Even if a contract variation takes place after 31 January 2014, if the transfer itself took place before that date, the old law will continue to apply.

Where necessary, this Chapter differentiates between the two positions by referring to new TUPE (all transfers on or after 31 January 2014) and old TUPE (all transfers before 31 January 2014).

In all cases, on the transfer date, all the old employer’s rights, duties and liabilities to its employees transfer automatically to the new employer, except as to pensions (see pages 67-69). This includes, for example, liability for acts of discrimination or for personal injury. The law behaves as if these acts were done by the new employer. As the position is complex, advice should be taken to make sure any tribunal claim is brought against the correct employer. Criminal liability does not transfer. Occupational pension schemes are excluded by Regulation 10 and do not transfer. All contract terms transfer, including those based on custom and practice.

Note that Regulation 4 of TUPE only prohibits changes to the contract terms of those employees whose contracts transfer, not those left behind, existing employees of the transferee or new joiners.

Under Regulation 6 of TUPE, trade union recognition transfers automatically, as long as the transferred group of employees “maintains an identity distinct from the remainder of the transferee’s undertaking”. Otherwise, recognition by the transferee must be negotiated. The law in relation to TUPE and recognition agreements has not changed.

Special rules apply in insolvency, making it easier for terms to be changed even though the reason for the change is the transfer, as long as changes are aimed at safeguarding jobs and ensuring the survival of the business. These rules are summarised in Chapter 7.