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Transfer of Undertakings (Protection of Employment) Regulations 2005

In March 2005 the Government issued its consultation paper on draft TUPE regulations which are due to come into force on 1st October 2005. The consultation period ends on the 7th June 2005.

These new regulations will impact on all businesses and other organisations engaged in contract work or who engage contractors e.g. cleaning, security etc or looking to acquire or dispose of a business or part of a business.

The main changes are as follows:-

	The draft regulations make it clear that TUPE will apply to all “service provision changes”. Therefore wherever you are dealing with a contracting in, contracting out, or a change of contractor for any service such as cleaning, security, building maintenance etc from 1st October it will almost certainly give rise to “a relevant transfer”.
	Whilst it will still not be permitted to vary contract terms for a TUPE connected reason the draft regulations make it clear that there may be scope for agreeing valid changes to contracts even where the reason is connected with the transfer provided that there is an “economic technical or organisational reason entailing changes in the workforce”.
	There will be a new obligation on the transferor to notify the transferee of the identities of the employees, and all the associated rights, liabilities etc relating to the employees that will pass across in the transfer. If the transferor fails to comply with this obligation the transferee can complain to the High Court which can impose a penalty of up to £75,000 which is then paid to the transferee.
	There will also be introduced joint and several liability for failure to inform and consult employee representatives. The Tribunal will apportion compensation according to the extent of each parties’ default. The Claimant can choose to claim against the transferor or the transferee or both.

Practical Tips

- If you have not already done so we recommend that you take stock of your outsourcing contracts. If you are about to engage or change your cleaners, security contractors etc think about what indemnities and warranties you will need in the contract to protect your position and in particular to avoid any potential for a £75,000 penalty or claim that you have failed to inform and consult employee representatives.

- If you are about to sell or acquire a business or part of a business make sure there are in place provisions indemnifying you from potential unfair dismissal claims etc and also appropriate warranties to make sure that all information provided to you is correct so that you do not take on any unforeseen onerous liabilities.

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