Employment law SOS: Obligations under TUPE
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Q My company is growing rapidly, largely through acquisition. Because of TUPE, we are obliged to maintain the working rates and conditions of employees we have 'inherited', but this is causing resentment among some of our existing employees who are on a lower rate for the same job. What does the law say about our ability to equalise pay and conditions?
You are correct to point out that under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), transferring employees into your company means you must also maintain their existing terms and conditions of employment.
Under TUPE there are a limited number of reasons when you can make changes to employment terms. However, mere harmonisation of employment terms is not a sufficient reason to fall within these limited exceptions. Any changes which relate to a wider reorganisation of the workforce or job roles, which has nothing to do with the transfer, are permissible.
The longer the gap between the transfer and any reorganisation, the greater the chance that the causal connection will be broken. However, there is no specific time limit and the courts have held that changes which occurred two years after a transfer were still connected with the transfer.
If you are considering beneficial changes, whereby all employees receive the higher rate, then it is unlikely that any employees will complain. An alternative method, but one which is highly contentious, is to dismiss and re-employ, although this may result in claims for unfair dismissal.
However, from this month it will be possible to vary terms and conditions which are incorporated from a collective agreement provided that the variation takes effect more than one year after the date of the transfer and that, following the variation, the terms are no less favourable to the employee when considered together than those which applied immediately before the variation.
