Can I change TUPE’d employees’ terms and conditions after 12 months?

November 29, 2021

If you’ve acquired employees through a TUPE transfer they will have come across on their pre-existing terms and conditions. Managing employees with two sets of terms can be challenging and for this reason many employers wonder about how (and how soon) they can ‘harmonise’ new employees’ terms to match the existing staff. Here we look at a common myth about TUPE protection and under what circumstances changing terms might be possible.

How long does TUPE protection last?

It is a common myth that the protection TUPE gives to employees transferring on their existing terms and conditions is time-limited. In fact, this is not the case, and any changes made at any time will be void (have no effect) if:

  • The sole or principal reason for the change is the transfer itself
  • The change is for a reason connected to the transfer and is not an ETO reason entailing changes in the workforce (we’ll come back to this later)

So, the usual mechanisms for changing terms and conditions of employment ie, where the contract itself allows the change or the employee agrees to the change, do not apply where there has been a TUPE transfer if the proposed changes relate to the transfer itself.

When can an employer make changes after a TUPE transfer?

This is where the mysterious ETO reason (mentioned earlier) comes into play.  An ETO reason covers Economical, Technical and Organisational changes. In a little more detail: Economic could relate to the profitability of the new employer, Technical could cover employer processes – where they might bring in new technology to carry out certain processes and Organisational could involve a company restructure. But an ETO reason in itself isn’t enough it must entail changes in the workforce so this means the change has to have an effect on the numbers of employees and workers within the business.  If we use the Technical example, it could be that the new technology the employer brings in automates some of their existing processes which may ultimately mean they need fewer people.

The obvious consequence of a TUPE transfer is the new employer often ends up with groups of employees on different terms and conditions of employment. As you can imagine this makes things quite difficult to manage and as a result, the first thing a new employer often wants to do is ‘harmonise’ employee terms and conditions. Harmonisation rarely succeeds regardless of how much time has passed since the transfer – this is because the underlying reason for harmonisation is the transfer itself. Further, harmonisation rarely involves changes in the workforce so it fails on both levels! It is possible, with the passage of time, that it’s easier to distance any changes to the transfer, but it is by no means a done deal so proceed with caution.

Can any other changes be made to terms and conditions of employment?

Changes can, in theory, be made if they are completely unconnected to the transfer as long as the normal protocol around making contractual changes is followed (consult, seek agreement etc).

In addition, something you can consider is tying in changes to pay rises or promotions. If someone who has transferred in is promoted, you can make this conditional upon accepting a new contract on your standard terms. As they will probably be getting a pay rise, they will normally be happy to accept. You could also do something similar at salary review time, or could even consider offering a financial incentive outside salary review time if you consider that worthwhile.

What about changes that are favourable to the employee?

This type of change is unlikely to be challenged by the employee and as such can be low risk. However, it is worth remembering that an employee may agree to some beneficial changes to their terms and conditions yet still be protected by the underlying terms and conditions of employment with which they transferred. Effectively this allows transferred employees to pick pre and post transfer terms which are of most benefit to them. An example of this is where an employee signs new terms around, say, an increase in holiday allowance and a new private medical insurance benefit. But if the Company Sick Pay (CSP) scheme the employee transferred over with is more favourable than that of the new employer they could still insist that the old CSP scheme applies to them.

 

To conclude, this is a tricky area – yes there are certain specific circumstances in which an employer can make changes to terms and conditions of ‘TUPE’d’ employees and trying to do it any other way will likely render the changes void. This is especially the case where an employer tries to circumvent the TUPE regulations. They are, after all, there to protect the employee!

If you do feel you really need to change terms, it is highly recommended that you seek professional advice first, in order to establish whether this is doable, and what route you should take to minimise the potential for legal claims.

 

If you need further advice on changing terms and conditions for TUPE’d employees, do get in touch.