Changing contract terms after TUPE transfer

This is a really important question and one that catches a lot of people out. The short answer is that TUPE provides strong protections against changes to your terms and conditions, but those protections are not absolute.

Legal framework:

The Transfer of Undertakings (Protection of Employment) Regulations 2006, as amended in 2014, govern this area. The key principle is that when you transfer to a new employer under TUPE, your existing terms and conditions of employment transfer with you. The new employer effectively steps into the shoes of the old employer and is bound by the same contractual terms.

The general rule on changes:

Regulation 4(4) provides that any variation of the contract of employment is void if the sole or principal reason for the variation is the transfer itself. This applies whether the change would be favourable or unfavourable to you. So the new employer cannot simply rewrite your contract to align you with their existing workforce, even if their terms are broadly similar or arguably better in some respects.

When changes may be permitted:

1. The reason for the change is not the transfer. If the employer can show that the sole or principal reason for the variation is an economic, technical or organisational reason entailing changes in the workforce, and that reason is not the transfer itself, the change may be valid. This is commonly referred to as an ETO reason. However, this is a high bar. Simply wanting to harmonise terms across the workforce does not qualify. The ETO reason must entail a change in the numbers or functions of the workforce, not merely a change to terms and conditions.

2. The contract itself permits the variation. Even here, this is limited. A contractual flexibility clause does not give the employer a free hand to make changes where the real reason is the transfer.

3. The variation is agreed by the employee and the reason is an ETO reason entailing changes in the workforce. Since the 2014 amendments, a variation is permitted where both the ETO reason exists and the employer and employee agree the change. Agreement alone is not enough if the reason is the transfer.

4. The terms being changed derive from a collective agreement. The 2014 amendments introduced a limited exception allowing renegotiation of terms incorporated from collective agreements, but only after one year from the transfer date, and only where the overall contract is no less favourable.

Practical reality:

In practice, new employers frequently try to harmonise terms. Sometimes they wait a period of time and then argue the transfer is no longer the reason for the change. The case law is clear, however, that the passage of time alone does not break the link between the transfer and the variation. The further from the transfer date you get, the easier it may become for the employer to argue the reason is something other than the transfer, but the connection can persist for a significant period.

If your employer is proposing changes, key things to consider:

1. Check what exactly they are proposing to change and whether the change would leave you worse off.

2. Ask them to confirm in writing the reason for the proposed change. If they cannot identify a reason other than the transfer or harmonisation with existing staff, the change is very likely void.

3. You are not obliged to agree to any variation. If you do agree under pressure, that agreement may still be void if the principal reason was the transfer.

4. Keep written records of everything, including any meetings, letters, and communications about the proposed changes.

5. If the employer simply imposes the change without your agreement, this could amount to a breach of contract or, in serious cases, a constructive dismissal. A dismissal where the reason is the transfer is automatically unfair under regulation 7, unless the employer can establish an ETO reason.

What to watch out for:

Some employers try to get around TUPE by dismissing transferred employees and re-engaging them on new terms. A dismissal connected to the transfer is automatically unfair, and the fact that you are offered re-engagement on new terms does not cure the unfairness.

Another tactic is to offer enhanced terms in some areas while reducing others. You are entitled to insist on all of your transferred terms, not just those the employer finds convenient.

If you are facing a specific proposed change, the critical questions are what is being changed, what reason the employer is giving, and how far from the transfer date you are. Those details will determine the strength of your position.