IMploy | TUPE – Is This The Next Generation?

I don’t often say this, but the draft regulations amending TUPE are worth a read, particularly in relation to the re-working of service provision changes (“SPC”). During the consultation earlier this year the Government indicated that it would look at removing the SPC elements of TUPE 2006, as part of its drive to remove “gold plating” from those elements of UK law implementing EU Directives.

At that stage it was not clear whether the Government was simply going to remove the definition of a SPC, or whether it intended to legislate that TUPE would no longer apply to SPC situations (which would probably be inconsistent with the Acquired Rights Directive).

During the consultation earlier this year the Government indicated that it would look at removing the SPC elements of TUPE 2006, as part of its drive to remove “gold plating” from those elements of UK law implementing EU Directives.

At that stage it was not clear whether the Government was simply going to remove the definition of a SPC, or whether it intended to legislate that TUPE would no longer apply to SPC situations (which would probably be inconsistent with the Acquired Rights Directive). 

In the face of significant opposition on that and numerous other points from business and the employment law fraternity (I was one of the Law Society Employment Law Committee reporting to BIS on the issue), the Government changed its tack and declared that it would not, after all, remove the SPC distinction.

It did, however, note that case law since 2006 had been whittling down the distinction between what had become “Category (a)” and “Category (b)” TUPE situations and confirmed that it would reflect that trend in the amending Regulations.  

Before looking at how it proposes to do that, my personal view is that TUPE has always applied to virtually all forms of outsourcing and insourcing. The concept of a “Service Provision Change” is a very neat way of describing those various situations in one expression.

However, I take the view that the expression “change of service provider”  implies that there needs to be a change to the provider of a service which needs to continue after the transfer. If that is correct, then the fabled Spijkers analysis of when TUPE applies, should apply equally to both “traditional” and “SPC” situations.

If this is correct, all that was needed – and still needs – to be done, is to eliminate the difference between Category (a) and Category (b), and have one definition of “relevant transfer” which incorporates them both, in other words get rid of the unnecessary legal “animal” of Category (b).

In its response to the Consultation on this point, the Government said:

“The Government will make an amendment to reflect the approach set out in the case law, namely that for there to be a TUPE service provision change, the activities carried on after the change in service provision must be “fundamentally or essentially the same” as those carried on before it”.

It is now worth looking at whether the Government has achieved what it set out not to do.

The mechanism which the Government used was to insert two things into TUPE – a new Regulation 3(2A) and a new definition of “TUPE transfer” (so that the employment lawyers’ shorthand expression is now a statutory definition).

The new Reg 3 (2A) states:

“References in paragraph (1) (b) [SPCs] to activities being carried out instead by another person are to activities which are fundamentally the same as the activities carried out previously.”

This change will apply to a TUPE transfer which takes place after the commencement date of these Regs.

“TUPE  transfer” means:-

(a) A transfer or service provision change which is a relevant transfer under the 2006 Regulations;

and

“service provision change” has the same meaning as in the 2006 Regs.

In other words, the new statutory definition of “TUPE transfer”  includes both “traditional” and “SPC” type transfers, ie incorporating “Category (a)” and “Category (b)” into one definition and the new scope set out in Reg 3(2A) applies to them both, as one definition, ie it applies to all types of TUPE transaction.

It seems to me, therefore, that, whatever it set out to do, in effect the Government has, indeed, abolished SPC as a separate category of transaction and has created one definition of when TUPE applies, removing any difference between the “traditional” transfers and “SPCs”.

Now that’s what I call certainty! 

Click here to view TUPE 2006 Regulations

Click here to view draft amendments to TUPE and TULRCA 2013