Proposals to improve the law covering employees’ rights when the business they work for transfers to a different employer were announced today by Trade and Industry Secretary Patricia Hewitt.

The changes to the Transfer of Undertakings (Protection of Employment) Regulations 1981 – commonly known as the TUPE Regulations – aim to make the process of business restructuring and public sector modernisation less threatening for employees and smoother to operate for employers.

The main proposals in the consultation document include:

• Options for new rules on when the TUPE Regulations apply, particularly in cases where services are contracted out;
  
• Proposals for better protection of employees’ occupational pension rights;
  
• Greater flexibility when applying the Regulations to transfers of insolvent businesses, to make it more attractive for potential buyers to rescue those businesses and save jobs;
  
• Better guidance for both employees and employers on the extent of protection against transfer-related dismissals or changes to terms and conditions; and,
  
• A legal requirement for the old employer (transferor) to give the new employer (transferee) proper notification about the rights and obligations being transferred.

Outlining the proposals in her speech to the TUC conference yesterday, Patricia Hewitt said, “Workers need reassurance that their rights will be safeguarded in the vital process of public sector reform and in business restructuring in the private sector. That’s why today I am announcing proposals for the reform of the TUPE arrangements, including looking at occupational pensions.

“The Government recognises that the existing Regulations are not working as well as they might do. Employers and employees, contractors and clients have all been pressing for change. The new proposals will provide greater assurance for employees and help to ease the process of change.”

The consultation will involve representatives of all those whose interests the Regulations affect, in both the private and public sectors. This includes the main social partners (such as the TUC and the CBI) and TUPE specialist groups (including the TUPE Forum, which represents all major parties with an interest in public sector service contracting). The deadline for comments is 15 December 2001.

TUPE Regulations were originally introduced in order to implement the EC Acquired Rights Directive (77/187/EEC) (sometimes known as the Business Transfers Directive), adopted in 1977. They have been amended on a number of occasions since their introduction.

The CBI has welcomed the government’s plans to review the rules covering the transfer of workers’ rights and pensions from one employer to another.

CBI director general Digby Jones said the government is right to conduct a review of the issue if it was causing staff and unions concern ahead of any private sector involvement in public sector reform.

“Removing fears about transferring to the private sector must be a top priority,” he said.

“If the biggest barrier to reform is staff and trade union concern, then the government should tackle the problem head on.”

From a union perspective the speech from Patricia Hewitt received a polite but short applause and commentators believe that the Labour Government has yet to rally support amongst trade unionists who are concerned over plans for the introduction of Private Funding Initiatives into elements of the state run education and health service. Public sector and local government workers are increasingly concerned that benefits within their employment contracts are under threat through ‘creeping privatisation’.