Something else BIS missed about TUPE

The new fangled TUPE provisions contain the express ability for an employer at Reg 4(5B) to change a term incorporated from a collective agreement where (a) the variation takes effect more than one year after the transfer and (b) after the variation rights are no less favourable overall.  The problem is that complying with these requirements causes significant problems with an often overlooked section of TULRA 1992.

TUPE continues in 5(C) that “Paras (5) and (5B) do not affect any rule of law as to whether a contract of employment is effectively varied“.  Which got me thinking as to other rules of law.

One of the ones it appears BIS did not think about was Section 145B of TULRA 1992.  To save a quick rummage through the statute books, section 145B gives individuals the right not to have their employer make an offer to have any term of employment no longer determined by a collective agreement.

So, for example, individuals transfer to a new employer which wants to have nothing to do with collective agreements or trade unions.  The new employer grumbles (they usually do) but abides by the immediate terms of the collective agreement to remain on the right side of TUPE.  It then avails itself of the ability to change under TUPE 4(5B).  It makes sure the offer is not less favourable and in certain circumstances is actually more favourable as they are offering better benefits (e.g. PHI).  It would appear, however, to fall straight into the prohibition in Section 145B TULRA.

The remedy for a breach of s.145B appears somewhat confusing. Or at least it did to me.  There is the financial element (£3,600 for the employers temerity for simply making an offer in compliance with TUPE but having forgotten about s.145B and simply having made the offer) in 145E(3), which I’m calling the “temerity award”.  Then

“(4)Where an offer made in contravention of section 145A or 145B is accepted—
(a)if the acceptance results in the worker’s agreeing to vary his terms of employment, the employer cannot enforce the agreement to vary, or recover any sum paid or other asset transferred by him under the agreement to vary;
(b)if as a result of the acceptance the worker’s terms of employment are varied, nothing in section 145A or 145B makes the variation unenforceable by either party.

After a bit of double reading (and a diversion as to whether “worker’s agreeing” is grammatically correct), I would suggest (a) deals with the worker agreeing to vary, e.g. at a future point in time, but not actually varying; and (b) with when the variation has actually occurred.

If an employer complies with TUPE it can vary terms incorporated from a collective agreement, but if this means the individual will not be covered by that collective agreement then s.145B applies and prohibits the change.  But if the individual has actually varied their terms the change is effective.  If, however, the individual has not yet varied, they can presumably cherry pick the best terms and refuse to implement the variation.  Which is a bit odd or appears to contradict what Reg 4(5B) of TUPE is trying to achieve.

The only ways in which the employer avoids paying the £3,600 temerity award are, as I see it, presumably either to negotiate collectively with the trade union it does not recognise over the collective agreement it did not sign.  I can’t see a union agreeing to the change to the collective agreement.  This leaves the employer in the position of making the offer, paying the award and only then implementing the change if the employees do actually vary the contract.  Alternatively the wording of 145B(1)(a) appears to sanction picking off individual employees two by two (readers can insert their own Noah’s ark joke here) if the variations are different.

I’m unsure as to what irks me most about this.  That TUPE doesn’t work with s.145B, that I’d forgotten about s.145B altogether or that the employer will need to take a temerity award gamble on each employee’s contract it wishes to vary.  Or something else.  It might be the grammar.

TUPE and Variations of Contract – today’s brain-teaser

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 2006Reg 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.