TUPE: Changing Cleaning Provider – Part 2

TUPE Consultation September 2013 Update:

As mentioned in our previous posting, back in January 2013 the Government started a consultation process to look at proposed amendments to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE regulations). The Government has now released its response to this consultation.

The major change heralded by the Government, namely the repeal of the “service provision change” (SPC) provisions in TUPE , proved to be most controversial. An SPC is where activities for a client are contracted out, transferred to a new contractor or are brought back in house. The first and second examples of which, are perhaps the most common place situations involving contract cleaning services.  The majority of respondents to the consultation were opposed to such a change and the Government has now confirmed that this change will not now be taking place.

SPC provisions will be amended however to reflect case law and this will be something of a simplification, meaning that the activities or service (e.g. Cleaning services) need to be “fundamentally or essentially the same” as they were before the provider was changed, which seems to be a common sense approach.

The biggest change that we will all need to be practically aware of is that TUPE information will now have to be provided 28 days before a transfer rather than 14. Substantial costs are involved if there is a failure to inform and consult those affected, the starting point for which is 13 weeks pay, therefore those dealing with TUPE and the transfer of service contracts need to be alert to the fact that they will need to get this information out earlier than before.

Another piece of case law that will be included into the TUPE regulations is the Alemmo Herron case. This will amend TUPE to provide expressly for a “static” approach to the transfer of terms derived from collective agreements made with the previous employer. In other words transferred employees won’t be entitled to any subsequent pay rise arising from a collective agreement made with the previous employer.

The intention is also to amend TUPE so that if the location of the workforce changes then this can be seen as being within the scope of an economic, technical or organisational reason (ETO reason). This will prevent genuine place of work redundancies from being viewed as automatically unfair.

Another big clarification is that a year after any transfer, terms and conditions can be re-negotiated without it being a breach of the regulations. Obviously, in line with the spirit of the regulations, any new terms and conditions must, on balance, be no less advantageous to the employees but it does mean that companies can have a degree of standardisation in their terms and conditions of employment, across their workforce, within a reasonable timescale.

These amendments should have no detrimental effect on the transferring of cleaning services contracts. In the main they should make the process more straight forward. However, the requirement to provide TUPE information 28 days prior to the transfer does underline the need for buyers of contracted services, such as cleaning, to ensure that their service provision contract contains a requirement for their current contractor to provide TUPE information efficiently and that notice periods and their buying regime fit with this time frame.

It is the stated intention of the Government that these new Regulations will go before Parliament in December 2013. The suggestion is that implementation would be in January 2014 and transitional provisions are to be expected. We will post further updates on the final recommendations and any further changes at the time.