To the considerable frustration of many a transferee employer, the scope for varying the contractual terms and conditions of transferring employees is notoriously limited.
TUPE 2006, Reg 4 renders void any amendment the sole or principal reason for which is either:
(1) the transfer itself; or
(2) a reason connected with the transfer.
The latter limb is qualified, however. If the transfer-connected reason is an economic, technical or organisational (“ETO”) reason entailing changes in the workforce, the amendment will not be void.
Amongst the changes introduced by the new Draft TUPE Regulations is a recasting of Reg 4. Reg 4(4) will now render amendments void in a narrower range of circumstances:
“… any purported variation of a contract of employment that is, or will be, transferred by paragraph (1), is void if the reason for the variation is the transfer.”
There are two immediately apparent changes. First, the Regulation no longer makes reference to the “sole or principal reason”. Arguably it now only applies where the transfer itself is the sole reason for the variation.
Second, there is no reference to reasons “connected with” the transfer. The implication appears to be that variations which are for reasons which are merely transfer-connected should be safe. There is, however, a big but and here at Hard Labour we like big buts and we cannot lie. New Reg 4(5)(a) will provide:
“Paragraph (4) does not prevent a variation to the contract of employment –
(a) if the reason for the variation is an economic, technical or organisational reason entailing changes in the workforce …”
What is the purpose of this provision? An ETO reason is a transfer-connected reason. If Reg 4(4) no longer applies to transfer-connected reasons – what is the point of Reg 4(5)(a)? Should it be taken to imply that a non-ETO transfer-connected reason will still fall within the scope of Reg 4(4)? Answers in the comments below, please.