Changing employment terms after a TUPE transfer

Posted on 27 Jan 2012 in Legal Updates

TUPE, the acronym for the Transfer of Undertaking (Protection of Employment) Regulations, often has many negative connotations for employers. However, a recent ruling by the Employment Appeal Tribunal (the ‘EAT’) suggests that there is greater flexibility for employers inheriting employees on a TUPE transfer to change terms and conditions of employment.

The main purpose of TUPE is to protect employees if the business in which they are employed changes hands. TUPE specifies that employees transfer on their existing terms and conditions of employment. Attempts to harmonise employment terms and conditions of employees transferring to the purchasing business will be void because the change is being made either because of the transfer itself or a reason connected to the transfer which is not an economical, technical or organisational reason entailing changes in the workforce.

The EAT in the case Enterprise Managed Services Ltd v Dance & others decided that a fact based approach should be adopted by tribunals when deciding the variations made are related to the transfer. Consequently, if the principal reason for the variation was to achieve improved performance and efficiency, harmonisation was only a by-product of the variation and not the main reason for the change.

Despite there being, in appropriate circumstances, the potential to make variations to post transfer terms and conditions of employment, employers should remain careful in making such changes and seek further legal advice.

Please contact Kim Klahn on 01789 206154 or kim.klahn@lodders.co.uk.