Peter Mooney, Head of Consultancy at Employment Law Advisory Services (ELAS), here focuses on whether the amendments to TUPE 2006, have achieved any improvement in the law surrounding dismissals and redundancies.
The much heralded amendments to TUPE 2006 came into force on January 31st with the arrival of The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014. Intended to protect the rights of employees who are affected by the acquisition of one business by another, the 2014 regulations came after much debate and consultation. But are they as radical as originally proposed, or have they in fact not gone as far as envisaged, specifically when it comes to the effect that they will have on dismissals and collective redundancies, which are those that affect 20 or more employees?
Both the former and the new employer can often minimise or prevent redundancies and other dismissals from happening when one company is bought by another, or, to put it another way, one business is ‘transferred’ from the old owner to a new owner and the staff under the old owner move across or transfer to the new owner. As before, the regulations state that dismissing an employee for a reason ‘connected with the transfer’ can amount to a claim for automatic unfair dismissal. A dismissal may be fair if it can be proved to be for genuine redundancy reasons and the employer has followed the correct dismissal procedure. Where a redundancy situation arises as a result of a transfer and the new employer is planning to make 20 or more redundancies within a 90-day period, then rather than having to wait until after transfer has been completed, as was the case under the old regulations, the new employer may elect to consult, or start to consult, with representatives of the affected employees about the proposed redundancies, before the transfer takes place. This is now known as ‘Pre-Transfer Consultation’. Where there are fewer than 20 employees being made redundant within those 90 days, there is still a legal requirement to consult but there are no prescribed time limits within which to do so.
Employers are obliged to consult about TUPE both before and after the transfer and the change means that both types of consultation will be able to run concurrently. For this to happen effectively, there must be decent, open dialogue between employers, elected representatives and/or a recognised trade union and employees. It is hoped that this will help to simplify what can be a disparate process, ensuring that all employees are collectively aware of exactly what the consultation entails, under one set of guidelines. Redundancy, although on paper can be a relatively straightforward process, is so easy for an employer to get wrong, often with disastrous consequences. All-too frequently, this is because of a failure to plan ahead, therefore rushing the process.
Although the changes to TUPE assist businesses in respect of collective redundancies where TUPE applies, it cannot categorically be said that the 2014 regulations altogether simplify or improve the law. The risks are still inherent when it comes to employers protecting themselves against the threat of costly unfair dismissal tribunal claims. This is especially prevalent for the new employer, who is under no obligation to implement or extend its existing pay structure, contracts or terms and conditions to those employees being merged from the former company. Although these changes assist businesses in respect of collective redundancies where TUPE applies, it cannot be said that the 2014 regulations either simplify or improve the law in this respect. A golden opportunity to bring clarity and certainty to this area of the law has been lost. This also applies to the duty to inform and consult in relation to a micro-business, which is defined as an employer, which employs fewer than ten employees. Such a small employer may comply with its duty to inform and consult, by consulting each of the affected employees directly. But it is considered that even this is still overly complex and burdensome.