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TUPE and changing terms of employment

Posted on 10th July 2013
Checklist

Where TUPE applies limits are imposed on the changes that can be made to your contract of employment that has transferred to your incoming new employer. This checklist will help you consider if any actual or proposed changes to your contract of employment by your new employer are enforceable.

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Julie Temple Julie
Temple
Partner Telephone: 01473 694407

For an ETO reason to be valid it must also involve a change in the workforce

Limits on changes to contracts of employment

Under TUPE your employment automatically transfers from your outgoing to the incoming employer with the majority of your existing terms and conditions of employment intact.

TUPE significantly limits the type and number of changes your new employer may seek to make to your existing terms of employment.

Any change to the terms of your employment will be void and unenforceable against you if the reason (or principal reason) for the change was:

  • the transfer itself; or
  • a reason connected with the transfer which was not an economic, technical or organisational reason entailing changes in the workforce. This is often referred to as an ‘ETO reason’.
To put it another way, changes to the terms of your employment can be made if they are for reasons wholly unrelated to the TUPE transfer or if there was an ETO reason for the change, which included the need for a change in the workforce.

Changes because of the ‘transfer itself’

In practice such changes are rare. It is unlikely that your employer will want to make changes to your terms of employment simply because the transfer has taken place and for no other reason.

One circumstance might be where your employer wants to harmonise the terms of employment of the transferring employees into line with its existing employees.

Without any other supporting reasons, changes like this will be unenforceable and may well lead to claims of breach of contract and unfair dismissal if unilaterally imposed.

Changes ‘connected to the transfer’

Changes connected to the transfer are more common. They generally arise because of a knock-on effect of the transfer. The question will be whether the change to the terms of employment would have happened anyway regardless of the TUPE transfer. If the answer to the question is no it is likely that the change will be caught by the prohibition and your employer will need an ETO reason to be able to enforce the change against you.

ETO reasons

Changes to your terms and conditions of employment are permitted where they relate to the transfer and are for an ETO reason. For example reasons relating to the:

  • profitability of your new employer’s business (this is an economic reason)
  • equipment or production processes used by your new employer (this is a technical reason); or
  • staffing and management structure of your new employer (this is an organisational reason);
may well be valid ETO reasons.

Changes in the workforce

For an ETO reason to be valid it must also involve a change in the workforce. Case law has established that this must entail a change in the number of employees employed or the nature or function of the work carried out. This is an important qualification and many employers have been caught out because they could not show there were no changes made to the workforce.

In practice genuine redundancies qualify as an ETO reason as this is an example of a decrease in the number of staff required. Requiring an employee to carry out a new role involving different skills may, depending on the circumstances, also qualify as an ETO reason.

Questions and answers

Does it matter when my employer tries to make the changes?

No. There is no fixed time period after which changes can be made and a connection to the transfer broken.  In theory (at least) a change could be because of the transfer or related to the transfer even if it is made some years after the transfer, but the longer your employer waits the more likely the changes will be unrelated.

What if the changes are beneficial to me?

On the face of it TUPE would prevent you from relying on a beneficial change to your terms of employment if the reason for them related to the transfer, or were connected with the transfer and were not for an ETO reason. This is not the case though.  You will be able to enforce changes made which are beneficial to you; in practice you can pick and choose between the changes.

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