News - UK

UK - March 2014

Collective redundancies and transfer of undertakings in the UK - what has change

On 31 January 2014 changes were made to the UK legislation which implements the European Acquired Rights and Collective Redundancies Directives.

The new Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (unattractively shortened to CRATUPEAR) state:

  • Where a business is transferred from one employer to another, redundancies that occur if there is a change in the location of the workforce after the transfer are no longer automatically unfair.  This assists the transferee where there is a genuine place of work redundancy. However the dismissals could still be unfair if a fair process is not followed.
  • Helpfully for transferees, collective consultation for redundancies (required where over 20 employees are at risk of redundancy) may be started by the transferor before the transfer and that period of consultation counts for the purposes of complying with the collective redundancy rules.  This is subject to the transferor and transferee agreeing to such consultation and the transferee continuing to consult meaningfully after the transfer.
  • Activities carried on after a 'change in service' provision (commonly applicable on outsourcings) must be "fundamentally or essentially the same" as those carried on before if they are to fall within the new legislation and be treated as a "relevant transfer".
  • The transferor (who loses the employees to the transferee) must now provide certain employee information to the transferee at least 28 days before the transfer (which is an improvement from the previous short 14 day period).
  • Transferees/the new employer may be able to amend terms in collective agreements during the period of one year after the transfer, provided that the overall change is no less favourable to the affected employee.
  • Following recent ECJ decisions (see our previous article) there will be a 'static' approach to the terms and conditions of employees who were covered by collective agreements when they were employed by the transferor.  This means the transferee will not be bound by any changes  to  collective agreements which take place after the  transfer date so long as the transferee is not itself a party to those collective agreements.
  • From 31 July 2014, small businesses with less than 10 employees will be allowed to inform and consult its affected employees directly if there are no recognised union or existing appropriate representatives.

Commentary

The changes are sensible and some of the changes (such as joint consultation and consulting directly with employees) reflect the commercial situation followed by many employers to date.  For many practitioners and businesses the changes do not go far enough and they are a watered-down version of the original proposals.

It is therefore unusual that the leader of the UK's opposition party/ the Labour Party has supported a parliamentary motion to repeal CRATUPEAR in its entirety.

Whilst the motion (called an 'Early Day Motion') is rarely successful it gives us an indication of the Labour party's view on the new law and the consequences if Labour wins next year's general election.  With three former employment lawyers currently in the Labour party cabinet, the UK may see major changes afoot if the political landscape changes in 2015.

Resources

Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014

Futher information

For further information or to discuss the issues raised, please contact Emma Clark or David Widdowson on +44 20 3051 5711 at Abbiss Cadres LLP - www.abbisscadres.com.

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