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Changing employment terms after TUPE

When TUPE applies, the affected employees automatically transfer to the incoming employer on their existing terms and conditions of employment. The terms and conditions of the contract cannot be changed if the sole reason for the change is the TUPE transfer itself.

If you want to change the terms and conditions of the employee’s contract, the terms must not be less favourable than the employee’s current terms and conditions.

If you attempt to change employees’ terms and conditions having a detrimental effect, the employees in question will be entitled to resign and claim constructive unfair dismissal.

Economic, Technical or Organisational Reasons

An employee’s terms and conditions can, however, be changed if it is for an economic, social, or technical reason.

Changes for an “ETO” reason will only be valid if they concern the day to day running of the business and a change in the workforce.

A change in workforce normally entails either a change in numbers or a change in job function. Changing only financial terms will generally not constitute a change in the workforce.

  • Economic: this concerns Company performance
  • Technical: this is to do with the equipment or processes that a company uses.
  • Organisational: this concerns the structure of the company.

It is important to note that changing the location of the workplace is often classed as an ETO reason, although this will depend on the extent of the change. Therefore any relocations will not automatically be unfair but the employer would still need to show that they have acted reasonably. Employers do however need to consult with employees and their representatives about the relocation.

In all cases, the new employer should provide all transferred employees with a new statement of terms and conditions within four weeks of the transfer occurring.

Crucially, an employee’s period of continuous employment is not disrupted by the transfer, and the date when an employees continuous employment started will be the date which the employee started work for their old employer.The only rights that do not transfer under TUPE are occupational pension rights and liabilities concerning provisions of occupational pension schemes, which relate to benefits for old age, invalidity or survivors.

What Employers Should Take Away

Employers should note that they can if they desire to, make employees terms and conditions more favourable.

Any changes that the new employer wishes to impose after a TUPE transfer can only be effected if the employee agrees; the changes cannot be imposed unilaterally, they must be agreed with the employees in question.

For TUPE advice for employers, please do not hesitate to contact us.

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