What effect will Brexit have on TUPE?
If ever there was an example of a law that the UK introduced reluctantly for the purpose of compliance with its obligations as a member of the EU, it…
If ever there was an example of domestic law that the UK introduced reluctantly for the sole purpose of compliance with its obligations as a member of the EU, it is TUPE.
A troubled history
When the original Transfer of Undertakings (Protection of Employment) Regulations 1981 were introduced to a sparsely populated chamber of the House of Commons, the sponsoring minister recommended them ‘with a remarkable lack of enthusiasm’. The principles they embraced were alien to local tradition. For example, the principle that an employee may be moved without his consent from one employer to another had been likened to slavery by the House of Lords in a landmark judgment.
Nothing in TUPE’s subsequent 34 year history has generated any greater level of enthusiasm. The Regulations have been a minefield of uncertainty, the product of poor drafting and inconsistent decisions in the courts and tribunals. The strong focus on employee interests has arguably created wider commercial unfairness. Greater levels of risk have been introduced into procurement processes.
So will a post-Brexit UK Government seize the chance to sweep TUPE from the statute books with glee?
Well, maybe – but this looks unlikely. Leaving aside the fact that we have yet to trigger Article 50 and actually leave the EU; leaving aside the question of whether the price of participation in the common market will be continued adherence to EU labour laws (and TUPE variants are alive and well in Norway and Switzerland, for example); and leaving aside the huge amount of parliamentary business that will be generated by Brexit, thereby slowing down the pace of change, there is a certain political attraction to retaining TUPE.
TUPE promotes dialogue with employees at times of business evolution and preserves jobs, so politicians will wish to think carefully before making a change. Furthermore, change itself is unattractive because the goalposts are moved mid term for service providers who are in the middle of delivering contracts and the prospect of change destabilises procurement processes.
Moreover, the UK has chosen not only to incorporate TUPE into domestic law but to go beyond the requirements of the Directive; the 2006 revisions and the concept of service provision changes created a wider scope for TUPE than exists in the rest of Europe. Policy has extended the reach of TUPE further, in that public sector employees transferring into the private sector enjoy ‘gold plating’. This was a political expedient to facilitate public sector outsourcing and it would doubtless be very difficult to reverse. There is a clear attraction to having a framework for the transfer of staff where outsourcing occurs.
Better the devil you know?
TUPE was conceived before the modern outsourcing industry had developed. It was never well suited to the circumstances it came to regulate. But things have settled down. The EU has run out of reforming steam in this area and changes in the UK have been limited to clarification and streamlining rather than policy shifts. If TUPE was to be abandoned, it is difficult to imagine that service provision changes and business transfers could be left unregulated – employees would have no right to be consulted and jobs would be lost. Wage levels could fall as a consequence. On that basis, TUPE benefits from ‘better the devil you know’ thinking.
What might be tempting would be to remodel and to refine TUPE free from the need to adhere to the requirements of the Directive. Yet the sheer weight of parliamentary business is likely to be such that these ‘nice to haves’ will be well down the queue.
It is surprising to say it, but TUPE has become part of the landscape. Those who prophesied, back in 1980, that TUPE would have a ‘drastic effect on British business’ have been proved right. TUPE has become the framework for public to private transfers and for outsourcing generally, as well as in its core rationale of business transfers. An unregulated environment is likely to cause undue disruption and those who predict the demise of TUPE look to be well wide of the mark.
Michael Ryley (email@example.com) is a Partner in the Employment, Pensions and Immigration Team and is based in London. If this article raises any issues for your business please do not hesitate to get in touch with Michael or speak to your usual Weightmans contact.