News Analysis
TUPE or Not TUPE? That is the Question!
Most HR practitioners have a favourite joke about TUPE, but how many of us remember life before these oft-berated rules came into force? Before 1981, transfers of businesses were – what shall we say? A bit more rough and ready than they are today. Sometimes workers moved over and then claimed compensation when their contracts were found to have altered. Usually they failed and consciences were pricked rather more when some workers were left with neither jobs nor compensation after finding themselves working for companies with negligible assets.
The original Transfer of Undertakings, (Protection of Employment) Regulations were introduced in 1981 to implement the Acquired Rights Directive 1977. The intention was to put a stop to these shenanigans. The Regulations' primary purpose was to give employees security where their employing organisation was being transferred, by halting changes in employment contracts and dismissals purely because of the transfer of business. Nothing is for life of course, and TUPE protection was not intended to be sine die . It applied to all sorts of transfers where an undertaking or part of an undertaking was being moved from one firm to another. (Acquisitions of companies through share deals were not affected.)
Business has benefited in some ways from TUPE. Workers used to be entitled to leave their new employer at the point of transfer and bring claims for redundancy as their employment had technically ended. ‘Businesses could find themselves with bills for redundancies of workers they would have rather have kept in jobs. 'It was far from ideal,' said Maureen Scholefield.
But the law in relation to TUPE is changing. Businesses of all shapes and sizes are potentially affected and the role of HR practitioners is crucial. Practitioners need to understand when the Regulations apply, how they work and their practical consequences. They must be able to assess risks and strategies when changing contracts of employment, avoid or minimise potential liability for unfair dismissal and redundancy payments and identify and implement employee information and consultation obligations. The case law has beaten well-worn tracks to employment tribunals as many will attest.
Changes in the TUPE Regulations have been in the offing for some time, and already courses and seminars are being arranged in anticipation of new Regulations being laid before Parliament this month. Changes are likely to include provisions to:
• Incorporate more comprehensive application of the basic TUPE concept to include situations where service provision is transferring as the ‘undertaking' in question. The aim is to remove the uncertainty around transfers involving labour-intensive services such as office cleaning, catering, security, and refuse collection. In future, TUPE will cover these sorts of activities.
• Ensure that the transferee is aware of the employees' rights and obligations upon transfer. (It is expected that the Regulations will clarify the precise requirements imposed upon the transferor with respect to the information which must be notified to the transferee concerning the transferring liabilities. There is a proposed fine of up to £75,000 for breach of the notification requirements, enforceable through the ordinary courts not through an employment tribunal.)
• Clarification of the circumstances when the ETO defence (see below) can be applied to change the terms and conditions of employment.
• Make the transfer of insolvent businesses more viable by introducing greater flexibility to attract potential buyers.
‘The ETO defence' is one of those essential things HR practitioners need to understand if they are going down the TUPE road. Basically, it refers to a ‘get out,' from the duty not to dismiss workers simply because of the fact of a transfer. The ‘get out,' is that such dismissals may take place if there is an ‘economic, technical or organisational' reason for them unrelated to the transfer itself. This is a veritable minefield on which HR practitioners are generally advised to take legal advice before stepping forth. The newly revised Regulations should clarify the circumstances in which the ETO defence may apply to bring about changes in employment conditions of employees transferred, as opposed to their dismissal and will be eagerly awaited.
Further information:
Whilst the revised Regulations may differ from the draft which was the basis of the consultative document, a summary of the proposed changes as they stood at consultation stage is published at http://www.dti.gov.uk/er/tupe/consultsum.htm
A more detailed document can be seen at http://www.dti.gov.uk/er/tupe/longconsult.pdf
A CIPD fact sheet is available at http://www.cipd.co.uk/subjects/emplaw/tupe/tupe.htm?IsSrchRes=1
Work and Families Bill
The Work and Families Bill
was published on 19 October. Its aim is to help working parents balance
the demands of their jobs with caring for their children by introducing
a ‘modern framework of rights and responsibilities.’
Most significantly, mothers will be entitled to nine months' statutory
maternity pay from April 2007. (This is likely to increase to a year
in due course.) Where the mother chooses to return to work after
six months but before the end of her maternity leave entitlement, fathers
will be able to take the outstanding amount of maternity leave as extended
paternity leave and will be able to use up any outstanding statutory
pay for this purpose. In this way parents will be able to share care
responsibilities should they choose to do so.
The Department of Trade and
Industry suggests up to 440,000 fathers could benefit from this arrangement.
Other measures aim to reduce administration and encourage planning and
communication during leave. They provide welcome clarification and simplification
for both employers and employees and will:
- introduce 'keeping in touch days' so that, where employees and employers agree, a women on maternity leave can go into work for a few days without losing her right to maternity leave or a week's statutory pay.
- extend the period of notice for early return from maternity leave from 28 days to eight weeks (allowing for easier business planning.)
- clarify, in law, that reasonable contact is permitted at any stage during maternity leave.
The new Bill will also extend
the right to request flexible working arrangements to carers of dependant
adults from April 2007, with further consultation to take place on precisely
which carers will qualify.
Two aspects of the Bill which have not been widely publicised are as
follows. Firstly, the Secretary of State will have power to increase
a ‘week's pay’ for the purposes of statutory redundancy
payments or unfair dismissal basic awards on one occasion only.
This means that a one off increase (in addition to the increase tracking
the changes in the retail price index) is now likely. It is believed
that this provision is likely to be used to compensate for the hanges
consequent on equalisation under the proposed age discrimination law,
effective from October 2006.
Secondly, the Working Time Regulations will be amended to make public
holidays additional to the four weeks paid holiday entitlement, rather
than inclusive.
Some of the changes are due to be introduced in April 2007. However, before any implementation takes place, there will be further consultation on the many areas where outstanding questions require to be addressed.
Further Information:
http://www.dti.gov.uk/er/workandfamilies.htm
'Demand for Flexible Working Not Satisfied,' Says TUC
The right to request to work flexibly was introduced in April 2003 and allows working parents with children under the age of six to request to change their hours. The recently published Work and Families Bill proposes extending ‘the right to request’ to the carers of older relatives.
Much of this is familiar territory to Cullen Scholefield, for the firm has been to the fore in implementing flexible working for its own staff. However demand for flexible working is outstripping supply. This is the message of a report by the TUC revealing an unquenched thirst for flexible working among British workers. It comes at a timely moment as the Work and Families Bill’s moves through Parliament.
Based on an analysis of Labour Force Survey figures the TUC calculates that more than half a million workers who have asked for a shorter working week have had their requests turned down. Almost one in ten of employees (2.3 million people) would like to work fewer hours, even if this meant taking home less money, says the TUC. HR professionals are broadly supportive of these ideas, at least in principle.
Carole Bates of Cullen Scholefield can’t help feel that organisations are missing a trick if they fail to wise up. ‘We were the first organisation in the South East to receive the Investors in People Work-Life Balance Award,’ she says, ‘ And flexible working has definitely served us well.’ She continues, ‘Many of our clients agree flexible working makes sound business sense. It can help deliver services cost-effectively and on time. Flexible working helped us recruit and retain high quality staff who are loyal and long serving. This in turn supports a culture consistent with our needs and the high expectations of our clients.’
Despite this support, over three-quarters of UK employees (77.4 per cent) have no element of flexibility in their employment contracts, according to the TUC’s report, 'Challenging times.’ The findings come in the context of growing moves in Europe to emphasise flexibility. Widely differing proportions of national workforces, work flexibly. Although there are now 150,000 more UK workers working flexibly since the 2003 changes, the total - a little over one in ten of all UK employees - is much lower than in Germany where 30 per cent work flexitime of some sort.
In November last year the European Trades Union Confederation and the
TUC organised a conference to look at how unions and employers across
Europe are altering the working day to help meet the needs of the 21st
century workforce. The TUC’s argument is that employees
are much more likely to be able to opt for flexible working arrangements
like flexitime and job-share if they work for an organisation where
there is a union. ‘Union members are nearly twice as likely to
be working flexibly (34.5 per cent), compared to employees from non-unionised
workplaces (19.1 per cent),’ says the TUC. Workers in the
public sector (19.8 per cent) are also more likely to have a greater
work/life balance than people working for private firms (six per cent).
On the other hand, the gap between what people want and what they do in terms of working hours is substantially circumscribed by what they can afford. 'Challenging times' says that although four in ten employees (9.4 million) would jump at the chance to work fewer hours, many are unable to do so for financial reasons. While 2.3 million say they would be willing to take a pay cut if it meant working fewer hours, the TUC points out that 3.5 million people could reduce their hours by cutting their unpaid overtime and sticking to their contracted hours.
A copy of the full report is available at http://www.tuc.org.uk/extras/CTreport.doc
Visit the Investors in People UK website for the Work Life Balance award
at
http://www.investorsinpeople.co.uk/IIP/Web/About+Investors+in+People/Work+Life+Balance+Model/default.htm
