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Myth busting: You can’t change the terms and conditions of a transferred employee under TUPE

Employment laws generate a lot of comment. Hardly a day goes by without the media reporting scare stories about the employment rights of UK employees, which are depicted as being anti-competitive, unduly restrictive and in many cases overly generous.

We are exposing some of the most common employment law myths and explaining the reality behind them. We are not pretending that employment law is easy – it isn’t, but generally it should not be difficult to get the basics right

This month we look at changing contracts following TUPE.

Myth: You can't change the terms and conditions of an employee transferred to a business under TUPE


There is no absolute bar on changing an employee’s terms and conditions of employment following a TUPE transfer but your ability to make changes will depend on the reason you wish to do so.

If the reason for making changes has nothing to do with the transfer you can go ahead and do it provided the contract terms permit the change or the parties agree [see Myth: You can vary an employment contract by giving notice for more information]. This might apply where your business wins a new contract and has to adjust the working patters of its staff to fulfil it. Equally, you can make changes where these become necessary because of revisions to external regulations which your business is obliged to follow as these are unrelated to the TUPE transfer.

The TUPE Regulations also allow businesses to vary terms and conditions of staff by agreement if they can establish an economical, technical or organisational reason for doing so which brings about a change in the workforce. This is known as an “ETO” reason and will only apply if you wish to make wholesale changes to the numbers of people you employ or to their job functions. So, for example, you would need to demonstrate that the changes you require are necessary because they relate to a redundancy or restructuring programme.

You will not be able to harmonise the terms and conditions of transferred staff for administrative convenience and there is no “safe” time after the transfer for you to do this. That said, the more time that has elapsed from the transfer the less likely it is that the changes you wish to make will be deemed to be because of it. To avoid difficulties, it is very important for you to steer clear of using the “language” of harmonisation when you are proposing changes and instead focus on the, non-transfer related reason behind your decision.

It is also worth mentioning that recent changes to TUPE mean that you can change the terms and conditions of staff that have been collectively agreed by a union if you were not party to those discussions (as will usually be the case if these were agreed before the transfer). To do this, the transfer must have taken place on or after 31 January 2014 and you must wait one year from the transfer and demonstrate that the changes you wish to make are, when taken together, “no less favourable” than the previous terms. If the transfer took place before 31 January 2014, you will not be bound by future changes to collective terms if you are not represented in those negotiations.

Getting this wrong is costly

You will not be able to rely on changes which are, subsequently, deemed to be invalid even if the employee has agreed to them and received a financial incentive to do so. We therefore recommend that you take advice before making significant changes to your workforces’ terms and conditions of employment.

Have you missed any of our other myth busters?

So far we have tackled the following myths:

1. In order to dismiss an employee, you must follow a particular procedure and if you do so, you can safely dismiss.
2. It’s not possible to retire employees anymore.
3. You can’t make a woman on maternity leave redundant.
4. Parents have the right to work part time.
5. An employer has to accept an employee’s resignation before it will take effect.
6. Employers must provide exiting staff with a reference.
7. Employers do not need to do pre-employment immigration checks on British or EU recruits.
8. You can vary an employment contract by giving notice.
9. An employee’s entitlement to notice is based on how often they are paid.
10. Employers have to accommodate all religious sensibilities and beliefs.
11. Employers can always pay the first £30,000 of any severance payment tax free.
12. Employers cannot lawfully dismiss if their employee is genuinely ill.
13. It is difficult to sack an under performing employee.
14. Employers do not have to follow a strict procedure before sacking an employee for gross misconduct.
15. Part time workers have fewer rights

Employment Law Update - February 2016