‘Can my employer change my contract after TUPE’ is a common question and concern for those employees affected by a transfer of undertaking.
TUPE, or the Transfer of Undertakings (Protection of Employment) Regulations 2006, aims to protect employees in the event their employment is transferred to a new employer following a business transfer or service provision change.
If the organisation you are employed by is transferred to a different owner, under TUPE your terms and conditions of employment (except in relation to pensions) should be protected, preserved and automatically transferred to the new owner.
Responsibility for all employment duties to you under statute and under your contract should transfer from your previous (outgoing) employer to the new (incoming) employer.
The provisions are mandatory for all employers, irrespective of size and sector, where there is a relevant business transfer.
In addition to the transfer of your contract and its terms, you also have the right to be consulted about the transfer. This means the outgoing employer must give you advance notice of any business transfer before it happens. You should also be informed of key details such as the proposed date of transfer, the reason for the transfer, any implications the transfer may have on you and any proposed measures that will be put in place for affected employees and a process to raise any objections to the transfer.
Your employment terms should not be altered as a direct result of a TUPE transfer without your consent. TUPE is a complex piece of legislation and much will depend on how employers have interpreted and applied the provisions. Take early legal advice if you are concerned about your employment rights relating to a transfer process.
Can my employer change my contract after TUPE? What is the process?
The specifics of the process your employer should follow will depend on the type of transfer that is taking place, but in general you should expect:
- Identification: Your employer has to determine which employees will be affected by the transfer.
- Information & consultation: All affected employees should be notified or and consulted on the changes well in advance of the proposed date of transfer. Details of the transfer should be given along with how employees can object. This may result in the election of ‘employee representatives’ and involvement of trade union representatives where relevant. The incoming employer must also inform their existing staff of the transfer.
- Disclosure of employee liability information: Your previous employer must inform the new employer at least 28 days before the sale or transfer of contract of key employee and due diligence information.
- Measures: You should be informed of any planned, post-transfer measures that could impact the terms and conditions of your employment.
Can my contract be changed under TUPE?
Generally speaking, changes to employment terms and conditions typically require the employer to obtain employee consent. This effectively prevents employers from being able to harmonise contractual terms of transferred employees and bring them in line with existing employees following a transfer – unless specific exemptions apply.
The potential lawful reasons which your employer may seek to rely on to justify amending employees’ terms include:
- Where the reason for variation is completely unrelated to the transfer
- Where the variation is favourable to the employee
- When the terms of the employment contract permit variation, for example, a mobility clause
- Limited insolvency situations
- If there has been a collective agreement that incorporates terms and conditions, those may be varied after more than a year from the transfer, as long as the employee’s terms are no less favourable overall than they were before the variation
- Where there is an economic, technical or organisational reason (ETO reason) relating to changes in the workforce, and the employer and employee agree to the variation
- A change to the place where employees are employed after the transfer can be an ETO reason
In most cases, employers will use the ETO (economic, technical, organisational) reason as the basis for making changes to employee contracts post-transfer. An ETO must relate to the numbers or functions of the workforce or the location of the workplace. Examples could include:
- Economic: a necessary reduction in headcount for cost-cutting
- Technical: an increased adoption of tech has reduced the need for staff
- Organisational: restructuring
Even where the employee has accepted a variation in terms, if the decision is found to have been due to the transfer, the changes will not be binding. This is because statute supersedes contract terms. This means if your employer offers you a financial incentive to accept the change in terms, while you may be less likely to bring a claim, you are not prevented from bringing a TUPE claim.
Transferring employees should be protected for at least two years after the transfer. In practice, however, it can become more difficult to establish the connection between the change and the transfer where more time has passed.
Any insistence by an employer that an employee has to accept new terms or face dismissal can be deemed automatically unfair dismissal.
Can my wages be reduced following a TUPE transfer?
Under TUPE, any attempt to change your contract terms will be void if the only reason or main reason for the change in contract terms is the TUPE transfer.
This means it would be unlawful for your new employer to reduce your pay, or make any of your existing contract terms less favourable. This includes where the employer is seeking to harmonise pay with lower wages or lower benefits of its existing workforce.
Insistence or pressure to accept the new terms could be deemed automatically unfair dismissal.
If you have been unfairly dismissed for refusing to accept an adverse change following a TUPE transfer, such as acceptance of lower pay that can be traced directly to the transfer, you may have a claim for unfair dismissal.
Can I be dismissed as a result of a TUPE transfer?
It is automatically unfair to dismiss an employee either before or after the date of transfer if the main or only reason for the dismissal is the transfer.
The only exemption where an employer may lawfully dismiss an employee in a TUPE scenario is where they can show an economic, technical or organisational reason (an ‘ETO’ reason) for the dismissal, entailing changes in the workforce. ETO reasons concern:
- ‘Economic’ reasons – relating to profitability or how the organisation is performing.
- ‘Technical’ reasons – relating to the technology, equipment or processes the organisation uses.
- ‘Organisational’ reasons – relating to the management or structure of the organisation.
Even where an ETO reason applies, the employer must act reasonably and follow the relevant legal procedures correctly in making the changes, or risk claims for unfair dismissal.
Do you have to accept a role with your new employer after the transfer?
It is possible to refuse a new position that has been offered by your new employer, known as ‘objecting to the transfer’, but this could limit your rights under TUPE.
The timing of your objection will be important, and should in most circumstances be made before the date of transfer. If you have not yet objected by the date of transfer, you will automatically transfer to the new employer on the transfer date, along with any other transferring employees.
This is a highly complex area and how you proceed you with raising an objection will have significant bearings on your payment entitlements and any potential right to claim compensation.
If you object to the transfer before the date of transfer, your employment contract will be considered to have come to an end on the date of transfer. You do not have to give notice. Having effectively resigned, your exit will not be considered a dismissal and you may not be entitled to claim compensation unless one of two exemptions apply. There are two scenarios where objecting to a transfer could be deemed a dismissal:
- If the employee’s objection is on the grounds of constructive dismissal or
- If the employee’s objection is on the grounds of a substantial change in working conditions to their material detriment and treats the employment contract as having been terminated.
Dismissals under these exemptions will be deemed automatically unfair unless an ETO reason applies.
If you are considering resigning after the transfer, take advice on your options, and whether you have cause to initiate a negotiated exit under a settlement agreement.
In some cases you might look to negotiate a new contract with your new employer, but you will not be part of the pool of transferring employees, taking you outside the scope and protection of TUPE.
Can I be made redundant as part of a TUPE transfer?
Transferring employees benefit from some protection under TUPE in respect of redundancy.
It would be unlawful for your new employer to make you redundant following a transfer unless certain, limited circumstances apply.
There must be a genuine redundancy situation and an ETO reason involving changes to the workforce for redundancies to be made ‘fairly’ after the transfer.
The ETO reason has to relate to changes in the new employer’s combined workforce.
If you are being redundant by your existing employer in advance of the transfer, you may wish to take advice on whether your dismissal would be deemed automatically unfair. Your employer must be able to evidence changes in the workforce and the future conduct of the business, which they may not have following the transfer.
Can My Employer Change My Contract After TUPE? Seek advice!
DavidsonMorris’ employment lawyers are on hand to advise on your rights in relation to a TUPE transfer including where your employer is looking to change your contract terms. Contact us for professional guidance.