The UK’s business transfer law – known as TUPE – had been criticised by companies for being more generous to employees than required by European law.
At the moment employees’ terms and conditions are protected, even if their ultimate employer is changed – such as when an outsourcer takes over the contract. Yesterday the government said that it will change the law so the new employer can alter collective agreements after twelve months.
In addition, employees who lose their job if the location of their workplace changes after the transfer will no longer be automatically able to claim unfair dismissal.
“These changes will clear out the cobwebs in some of the rules which will give businesses more clarity about conducting transfers,” said Lib Dem business minister Jo Swinson.
“We are reforming these rules, keeping in place the necessary protections for employees and helping support a stronger economy.”
But the government said it would not proceed with a key part of the reforms, which would have removed most TUPE provisions from outsourcing deals, after businesses said it would actually increase uncertainity.
Clare Gregory, a partner at law firm DLA Piper, said the government had resisted the temptation to “deregulate for the sake of deregulation”.
“It is particularly significant that the government has decided to retain the provisions which apply TUPE to most outsourcing arrangements,” she said.
“Few employers who dealt with the uncertainty, increased cost and potential for dispute which existed before these provisions came into force in 2006 would have wanted a return to the old position.”