When a business transfers to a new owner or a there is a change in the business providing services, the employees working in the business may be protected by the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).
A key component of that protection is the need for the employers to inform and consult with appropriate representatives of employees who may be affected.
From last week, small businesses with 10 or less employees (microbusinesses) are able to benefit from changes which permit them to inform and consult directly with affected employees, removing the requirement to elect employee representatives.
Previously, the election of employee representatives was required when there was neither a trade union recognised by the employer nor any existing employee representatives with the authority to be informed/consulted on TUPE. This will often be the case for the microbusiness since employee relations are rarely formally organised and the tendency is to deal directly with employees instead.
The rationale for requiring such employers to inform and consult indirectly through a specially elected representative has long been questioned and, unsurprisingly, many small employers would rather inform and consult directly. The regulations had been regarded as being unnecessary and disproportionately burdensome on the microbusiness, which regardless of its size has to comply with the employer’s duty to facilitate and oversee a fair election, provide facilities and, if necessary, training to the elected representative(s).
A consultation carried out by the government returned a majority of support for change. Those disagreeing felt that individual consultation was no substitute for the benefits of indirect consultation through workplace representatives. However, perhaps this fails to appreciate the more personal nature of employee relations in microbusinesses and how the regulations can unhelpfully create an artificial distance and barrier which may not otherwise exist between the employer and the affected employees.
What matters is the size of the employer and not the number of affected employees nor the size of the business/service transferring. Many larger businesses will be disappointed, therefore, that the Government rejected calls for a similar relaxation of the consultation rules for when only a small number of employees are affected; for example a microtransfer. If there are neither recognised trade union representatives nor appropriate employee representatives, an election of employee representatives will still be required, even if the transfer affects only one employee.
These new changes are the last of a number of changes which the Government has implemented since January 31 2014. The Regulations and the duties they impose remain no less complicated and the financial consequences for getting it wrong remain as serious.
Cara Erikson, senior associate in employment law unit, Stronachs LLP