The DTI has launched a consultation on draft regulations that will change
the Transfer of Undertaking (Protection of Employment) Regulations 1981 (TUPE).
TUPE was originally introduced to meet the requirements of the Acquired Rights
Directive 1977. This directive was replaced by Directive 2001/23 (the Directive),
which was adopted on 29 June 2001 by the European Council, and member states
were given three years to implement the changes.

It should be noted that the DTI has stated that all policy decisions have
already been resolved and it is therefore not now consulting on the policy
issues underlying the proposed changes to the Regulations (but simply on whether
the drafting achieves their policy objectives).

Among the main proposals outlined in the consultation are:

  • Making it clear that TUPE does apply where there is a change in the
    provider of a service (commonly described as 'outsourcing' or 'contracting-out')
    so that all of the parties know where they stand from the start. (However the
    draft regulations expressly exclude the supply of goods and "one-off buying-in
    of services" from the scope of TUPE and the DTI is also consulting on
    a proposal to exclude professional business services).
  • Increasing the transparency of the transfer process by requiring
    the transferor (the original employer) to notify the transferee (the new employer)
    of the identities of the transferring employees and all related rights and
    liabilities. A failure to notify the new employer of any employment liabilities
    may lead to a fine of up to £75,000.
  • Introducing greater flexibility to the application of TUPE where
    the transferor is insolvent, in line with the Government's general policy to
    promote a "rescue culture".
  • Clarifying the circumstances in which employers can lawfully make
    transfer-related dismissals and negotiate transfer-related changes to terms
    and conditions of employment for economic, technical or organisational reasons.

The DTI has requested responses by 7 June 2005 and the revised regulations
are intended to come into force on 1 October 2005.

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