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THE Transfer of Undertakings (protection of employment) Regulations have been a thorn in the flesh of businesses ever since they were enacted in 2006.

They have become a straight jacket for businesses because they prevent the changes which have to be made to enable companies to win contracts by operating more economically and efficiently.

The Government has now launched a consultation on changes to these regulations, (commonly known as TUPE) as part of its Red Tape Challenge.

Currently TUPE covers two sets of circumstances:

Firstly, where there is a transfer of an “economic entity”. That is a business or part of a business.

Secondly, where there is a service provision change.

Take for example a large manufacturing complex which outsources its security and facilities management. When it puts this work out to tender and decides to change the service provider, possibly because it is unhappy with the service it is receiving from current provider, the new provider who wins the contract has to take on the staff who were working on that site for the previous provider.

The outcome is that if the job was being done badly by the existing team, chances are it will continue to be done badly by the new team.

The new provider has no prospect of dismissing the old team as the dismissal will be seen as being “connected with the transfer” and therefore automatically unfair.

Worse still, the old provider will take the opportunity to get rid of its least-able people by placing them on that site as soon as they are given notice that they have lost the contract.

The new provider, who has probably put in a cheaper bid will suffer the cost of sorting all this out and will have less money to do it with.

The consultation paper proposes to remove service provision changes from the scope of TUPE and to change the wording of the provisions for unfair dismissal to enable employers to dismiss fairly for economic, organisation or technical reasons without the risk that the dismissal will be “connected with the transfer” and therefore unfair.