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02 May 2017

TUPE: Post-Brexit Reforms

2 mins

There has been much speculation regarding the future landscape of domestic Employment Law Post-Brexit and the legislation governing the transfer of undertakings is an area where many anticipate there will be scope for further reform.

Since its enactment in 1981, many employers have criticised the current Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (TUPE) legislation as providing constraints to commercial flexibility. Its complex structure for implementation has lead to several reforms over the years, more recently in 2014, however, any changes to TUPE thus far have been fairly limited due to its being subject to the EU Acquired Rights Directive 2001/23 EC, and the obligation to incorporate the Directive’s requirements into domestic law.

If the government opts for a ‘hard’ Brexit approach, there is the possibility that TUPE could be repealed, as the UK would not be obliged to maintain any transfer of undertakings legislation. Yet if Britain wanted to remain part of the European Economic Area, for example, the TUPE legislation would need to be retained.

Indeed, there are persuasive arguments for the retention of TUPE including protecting employees during a time of uncertainty and ensuring business continuity by automatically transferring employees from one service provider to another. To repeal the legislation entirely would cause considerable disruption to existing outsourcing, retendering and in-house services, which are all reliant on TUPE applying on any relevant terminations.

It is therefore thought to be more likely that TUPE will be retained, but not without the government taking the opportunity to push for more large scale reforms. Reforms that might be considered include:

  • Alleviating employers of the burden of conducting a collective information and consultation exercise before a transfer;
  • Further diluting the legislation in insolvency situations;
  • Smoothing the transition of terms of employment for employees post-transfer.

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