New TUPE Regs - Update

Thanks to Michal Stein of Nabarro Nathanson, and to Pat Stein of the DTI, for the following information]

We have been awaiting the new TUPE regulations for some time. This is an update as to the current position (source: the DTI).

• draft Regulations will be published, for a three-month consultation period, in October 2003. This second consultation will concentrate on whether the draft Regulations fulfill the stated policy aims, rather than consulting on the underlying policy aims themselves;
• it is hoped the new Regulations will take effect from April 2004;
• the Regulations will primarily codify existing caselaw and consolidate the provisions of the recent Acquired Rights Directive. For example, the rule in Wilson stands and there will be no scope for changing employees' terms and conditions following a TUPE transfer (except as set out in the next bullet point);
• the principal substantive change is for insolvent businesses. When a genuinely insolvent business is transferred (which includes wound up businesses but not those placed in administrative receivership):

1. the transferee will be able to agree changes to terms and conditions with the workforce (and will not thereby be in breach of TUPE); and,
2. liability for arrears of wages will not transfer over, but will be met by the state (up to the statutory cap). The DTI will not reveal the position for arrears of wages over the statutory cap; this will be revealed next month.

• eventually, provisions will be introduced requiring the transferee employer to match an employee's pension contributions up to a maximum of 6% into a stakeholder (or equivalent) pension scheme. Thus if an employee contributes 4% of salary into an occupational pension scheme, the transferee will have to do likewise. However, this will not form part of the new TUPE regulations, but will form part of the forthcoming Pensions Bill, to be issued by the Department of Work and Pensions, and is unlikely to take effect for some time.