What will Brexit mean for TUPE?

Ian Longdin
2 June 2017

Brexit is upon us, at least, it will be over the coming months and years. Quite what its impact will be on the English legal system is still being determined in the various government departments of state.

Expert lawyers have yet to grasp its full effects across all branches of law. One such area is our implementation of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

These regulations are a consequence of the Acquired Rights Directive 2001, a European Union measure designed to protect employees who find that their employer is changing. This could be as a result of mergers, takeovers and amalgamations, or from a decision to outsource a particular function within an organisation, for example a services contract being re-tendered with the work transferring to a new service provider.

This is achieved by TUPE preserving their existing contracts of employment after the change and on the same terms as before.

What are the likely effects of our withdrawal from the EU on our TUPE regulations? Although this is a matter of conjecture, the following suggestions can be made.

It is improbable that TUPE will be repealed in its entirety. The concept that employees should have some form of protective support where the employment market is becoming increasingly volatile is sufficiently grounded in this country that it would be a dangerous political policy to take away TUPE lock, stock and barrel. Modifications to its provisions are much more likely.

One possibility here is the repeal of the 2006 reform that introduced a new test for application of TUPE to service provision changes (outsourcing etc). This widened the potential for TUPE to apply to outsourcing situations and has led to several appeal tribunals and courts finding ‘innovative’ ways of limiting its applicability to such transfers.

Again, however, this would seem unlikely to be on the Brexit reform agenda as the previous Coalition government had proposed such a change only to be met by strong objections from business and industry pressure groups, who argued the position would become much more complicated if we returned to the previous tests used to decide when TUPE applies to outsourcing situations.

A more likely area of reform is the information and consultation requirements where TUPE transfers are involved. A proposal to abolish the requirement for collective consultation might be put forward with more urgency (either for all TUPE transfers or limited to SMEs with larger organisations still being subject to consultation processes).

Another potential change could relate to the so-called two-tier workforce problem after a TUPE transfer. A proposal may come forward to allow the new employer to harmonise pay and other working conditions between its existing employees and the newly transferred employees.

Although the employment contracts would still be preserved, there would not be the current right to retain the previous terms of employment. The Coalition government had suggested this in 2013, only to be given legal advice that under EU law it would be illegal. Brexit would render that argument irrelevant.

One further development post Brexit would be to remove the influence of the European Court of Justice as the final arbiter of how to interpret and apply TUPE. Over time, this could lead to divergence in the approach being used in UK employment tribunals and appeal courts from that used in all the member states of the EU.

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