Between last November and this January, the government was calling for evidence on whether, and how to reform the law on transfers of undertaking (“TUPE”). This wasn’t a full-blown consultation, and it will take some time before Regulations are published, but the direction of government thinking is clear.
By way of context, it needs to be explained that the relevant law doesn’t start in Britain but originates in Europe. Article 3(1) of Council Directive 77/187 provides that where there is a transfer of employment the employee’s terms of employment transfer with her to her new job. Regulation 4(2) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 give effect in UK law to this principle.
TUPE limits the power of business, especially in circumstances where (as is increasingly common) parts of education, local government or healthcare are awarded to private sector employers. The latter pay less and are less likely to recognise unions and are less likely to offer pension schemes, of any description. They would like to be able to pay workers the same low-wages as are pervasive in private industry, but are limited by a combination of contractual theory (where an employer wants to vary a worker’s terms, to make them inferior, the worker is under no duty to accept, and if they do not accept, the older conditions prevail) and European law (ie TUPE).
The Coalition would like to introduce a generic “harmonisation defence”, ie a universal rule that whenever an employer wants to reduce the terms of transferred workers to those of the new employer, they should always be allowed to do so.
But (reading between the lines), the Coalition’s lawyers have advised ministers that such a defence would be incompatible with EU law, and would easily be overturned.
So the Coalition’s call for evidence, asks business a number of questions, including the following:
Question 10: Is lack of provision for post-transfer harmonisation a significant burden? How might the Regulations be adjusted to enable this whilst remaining in line with the Directive?
Translation: we need you to yell us that TUPE is bad for business. Give us your scare stories and we promise to leak them to the Times, Telegraph, Mail, etc.
We want to opt-out of TUPE, but can’t think of a way of doing so while we remain in the EU. We’ve asked our lawyers and they don’t have an answer. You’re big business, you’ve got lots of money, can you find a different lawyer who can solve this problem for us?
Question 11: Would it be helpful to have a provision limiting the future observance of terms and conditions derived from collective agreements?
Translation: at the moment, it’s common for unions to insist that when a bit of the public sector is sold off, that organisation should still be subject to terms set by pay bargaining. Couldn’t we rewrite the law to declare this approach unlawful, so that if for example public sector workers were used to annual pay rises but the new employer never made pay rises, the new employer’s approach would prevail?
The call for evidence is now closed, but at some point the coalition will publish its answer, and after that there will no doubt be a further consultation and then fresh Regulations. TUPE is in the government’s sights, and the pay and conditions of many hundreds of thousands of transferred workers are likely to get worse.