TUPE and the Employment Rights Bill

In May 2024 the Labour government’s “Plan to Make Work Pay” stated that Labour would “strengthen the existing set of rights and protections for workers subject to TUPE processes.” The “Next Steps” paper confirmed that the government would launch a call for evidence to “holistically examine a wide variety of issues relating to TUPE regulations and process, including how they are implemented in practice”. However, the details surrounding proposed changes to the TUPE regulations are not clear.

The previous Conservative government did consult on clarifications to TUPE in July 2024, where views were sought on the application of TUPE to limb (b) workers, and the application of TUPE where a single business is transferred to multiple transferees.   These consultations arose as a result of caselaw which had resulted in uncertainty for organisations, in particular with regard to an Employment Tribunal case where it was found that workers (as well as employees) should transfer under TUPE. This case has caused practical difficulties and it is hoped that timely clarification on this point will be provided.

In the Labour government’s roadmap for delivering change document which can be found here it is notable that there is no reference to the TUPE changes that had been referenced in the Plan to Make Work Pay.  we shall therefore have to wait and see what changes to TUPE transpire throughout the term of the Labour government.

Within the ERB however, there are many changes that organisations will need to be aware of that will impact upon the TUPE transfer’s.

Employment status

Labour have indicated that they intend to move towards a single status of worker, rather than there being those who are classed as employed, self employed or as workers. These distinctions do cause confusion and a single status of worker will assist in removing sometimes confusing distinction between employees and workers, both in the context of TUPE transfers and in employment law generally. How this will be implemented or when we expect to see such changes is not clear however, as this will require careful thought and planning, considering the significant repercussions that changes to employment status may bring to both individuals and organisations.

Day 1 unfair dismissal rights

The ERB as currently drafted will provide employees with the right to claim unfair dismissal from day one of their employment. According to the ERB roadmap the day one rights to claim unfair dismissal will come into effect in 2027, with consultation on the changes taking place later this year / early next year.  When considering this from a TUPE transfer perspective, transferees will need to be mindful of this when considering the staff they are inheriting, with due diligence being key. It is worth bearing in mind that there will remain the fair reasons for dismissal and within the ERB, there are provisions which will enable employers to follow a “lighter touch” process during an initial period of employment (which will be similar to a probation period). It is not clear what this lighter touch process will look like, and it is worth noting that such a process will not be available for redundancy dismissals or certain SOSR dismissals. This means that any redundancy process will need to be  comprehensive for all employees, whereas previously length of service offered scope for shortened processes where appropriate.

Public sector outsourcing

It is also worth noting that the ERB contains provisions where regulations will be made to avoid a post TUPE “two-tier workforce” – which is referring to the situation where private sector employees and those who have transferred from the public sector are employed on different terms and conditions.

The ERB as it is currently drafted refers to regulations being made whereby for a relevant outsourcing contract, those who take over the contracts are required to ensure that the incoming workers are treated no less favourably than the existing workers, but also that existing workers are treated no less favourably than the incoming. This could mean that those who are taking over public sector contracts could be required to enhance their current workers terms to those which the public sector workers are entitled. There is no more detail on this as yet as we shall need to see the content of the regulations referenced, but this could have a significant impact for organisations and a huge change in how TUPE will operate.

The explanatory notes to the ERB specify that regulations may be used to “specify provisions to be included in relevant outsourcing contracts” for the purpose of ensure that there isn’t any less favourable treatment. This could include providing model contract clauses. In addition, the explanatory notes reference a code of practice which shall contain guidance for organisations.

Comment

Whilst specific changes with regard to TUPE have not materialised as anticipated, there are significant changes to workers rights which will have an impact as part of the TUPE process. Whilst the ERB has not yet become law, it is anticipated that there will be many changes that organisations shall need to be appraised of to ensure ongoing compliance, in an already complex are of the law.