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Harmonising terms and conditions under TUPE

Under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), an employee's terms and conditions of employment are protected when a business is transferred from one owner to another.

Any variations to an employee's contract are considered void if the sole or principal reason for them is the transfer itself, or connected to the transfer. The exceptions are for when they are done for economic, technical or organisational (ETO) reasons entailing changes to the workforce and relating to the numbers or functions of the employees affected.

It's likely that a new employer may want to harmonise terms and conditions between existing workers and incoming staff protected by TUPE. For example, it may cause bad feeling that the one group has better terms and conditions than the other.

It may be easier to vary the contracts of existing employees, who wouldn't be protected by TUPE, but in many cases their numbers may be much larger than the incoming group - and making such changes could be costly and disruptive. Imposing less generous terms and conditions is likely to create its own employee relations problems.

In a TUPE situation, legal experts often remind employers that normal rules about varying contracts don't apply. It's not enough that employees protected by TUPE agree to proposed variations, even favourable ones. Any variation brought about because of a transfer could be 'void', without legal force - which could lead to difficulties further down the line if an employee raises a later objection about what's been agreed.

Even a lengthy passage of time after a transfer may not entirely remove the risk for the employer, though it will be more likely that the reason for the variation will be unconnected to the transfer, allowing both sides to agree changes following correct procedure. But if the transfer is still a factor, then again an appropriate ETO reason will be needed.

However, a recent reform allows businesses to renegotiate terms and conditions provided for in collective agreements one year after the transfer, provided the overall change is no less favourable.

As it is a complex area, it's a good idea to get advice from an employment solicitor, if you are affected by this or related issues.

Given that there may be difficulties in changing a contract of employment, employers may have to live with differences in terms and conditions that can't be harmonised. Using the information and consultation process during TUPE will give employers the opportunity to make sure existing and incoming staff know and understand any differences in their contracts. Being open and honest about it should maintain trust, and help staff accept any differences.

Acas has detailed information on Transfer of undertakings (TUPE). Acas also offers practical training courses on TUPE, as well as Contracts and terms and conditions, and is holding a TUPE Conference - Know the rules, avoid the pitfalls in November.

Visit the Acas Training Courses, Workshops and Projects page for more information.

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