Further Employment Law Changes are Coming in July…

April witnessed a number of changes to employment law taking effect.  July will see the implementation of further changes which should lead to greater flexibility for employers surrounding the TUPE regulations and increased protection for employees concerning the code of practice on ‘firing & re-hiring’. Here, Nigel Targett, Employment Partner explores the legislative changes in detail.

TUPE

TUPE (Transfer of Undertakings (Protection of Employment)) is the law that protects employees, and their benefits, when their employment changes hands. The TUPE process applies to all businesses in the UK, regardless of whether you own a large corporation or a small local business.

Currently (prior to July 2024), an employer is required to consult with any recognised trade union or, if there is none, appropriate employee representatives about the relevant transfer and the staff it will affect. If there is no trade union or employee representatives, an employer should arrange an election to elect employee representatives to consult with. In smaller organisations (those with fewer than 10 employees), an employer may consult with employees directly (assuming there is no recognised trade union).

For any transfers taking place on or after 1 July 2024:

• Small Business Exemption – if your business has fewer than 50 employees, you may consult directly with the affected employees, provided no existing employee representatives are in place
• Small Transfer Flexibility – for businesses of any size, if the relevant transfer involves fewer than 10 employees, you can opt for direct employee consultation (again, assuming there are no existing employee representatives).

Regardless of the above, an employer should continue to consider whether it may be beneficial to elect employees’ representatives. The new law does, however, provide greater flexibility and may reduce an employer’s administrative burden. It may also improve the lines of communication between employers and employees, ultimately leading to satisfied employees and a smooth transfer process.

A failure to follow the correct process exposes transferors (being the selling business) and transferees (being the buying business) to up to 13 weeks gross pay per affected employee.

Code of Practice on ‘Dismissal and Re-engagement’

There are times when an employer needs to make contractual changes to an employee’s terms and conditions. Normally, any changes to an employee’s terms and conditions would be made through consultation and agreement with the employee involved. However, sometimes there are exceptional circumstances where agreement cannot be reached, and the employer has genuine and pressing business needs. This can result in employers unilaterally changing workers’ terms and conditions by terminating their contracts and re-hiring them on new terms and conditions – also known as ‘fire and re-hire’.

From 18 July 2024, the UK’s first Statutory Code of Practice on ‘Dismissal and Re-engagement’ will take effect. Although there is no ban on the practice of ‘fire and re-hire’, the new statutory code imposes expected procedures on employers wishing to use the practice, and states that ‘fire and re-hire’ should only ever be considered as a last resort. The practice of ‘fire and re-hire’ creates a high risk of reputational damage and likely has an adverse effect on employee relations. As a result, the Code carries a serious risk of costly claims and wider commercial repercussions, providing a stark warning to employers that the practice should only be undertaken after extensive consultation and consideration of alternatives.

If you would like to seek advice on any of the changes highlighted in this article or another Employment Law related matter then please contact Nigel on nigel.targett@coolebevisllp.com or call him on 01903 534510.