TUPE - Changes to Terms and Conditions of Employment

Introduction

Ordinarily, when one business acquires another, inheriting those employees, the employees can look forward to certain protections preventing the “new” employer from unilaterally changing their terms and conditions of employment. A recent decision of the Workplace Relations Commission (WRC) examined the extent to which a “new” employer could, potentially, change the working terms and conditions of the employees of the acquired business.

Paddy Dandy (the Complainant) took a case against Rentokil Initial Limited (the Respondent) (ADJ00032580) with a number of other employees, contending that the changes in his pay frequency constituted a breach of the employer’s obligation not to make unilateral changes to working routines or practices that had been previously enjoyed under the “old” employer.

In 2015, the Complainant transferred to the Respondent in accordance with the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (Statutory Instrument 131 / 2003) (TUPE). When he worked with his previous employer, he was paid weekly. At some point after the transfer, the Respondent changed his pay frequency to fortnightly.

On 15 December 2020, the Complainant and his colleagues were informed that, in January 2021, the Respondent intended to change their pay frequency to monthly. This was confirmed in a letter dated 23 December 2020. The Complainant and his colleagues objected to this change and a second meeting took place on 07 January 2021. No agreement was reached on the issue and, on 26 February 2021, the Respondent wrote to the Complainant to confirm that he would be paid monthly with effect from 17 March 2021. Since that date, the Complainant has been paid on the 17th day of each month. 

On 01 April 2021, the Complainant and nine other employees submitted a complaint to the WRC.

The Law

The Complainant transferred to the Respondent more than five years prior to the filing of the WRC complaint, and he claimed that the protection of Regulation 4 of TUPE applied to these changes in his conditions of employment. Regulation 4 relates to the transfer of contractual entitlements. Sub-sections (1) and (2) provide that terms and conditions that existed on the date of the transfer would continue to apply following the transfer:

• The transferor’s rights and obligations arising from a contract of employment existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee: and

• Following a transfer, the transferee shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement until the date of the termination or expiry of the collective agreement or the entry into force or application of another collective agreement.

No argument was made that there was a collective agreement between the transferor and the Complainant or his union, and the Complainant therefore argued that there was a breach of Regulation 4(1), concerning the obligation of a transferee to continue to observe the terms and conditions existing on the date of a transfer.

In summary, the Complainant and his colleagues argued that they enjoyed a right to be paid in the same manner they were usually paid prior to the transfer.

Decision and Conclusion

The Adjudication Officer noted that, aside from the time limit set out at Section 41(6) of the Workplace Relations Act, Regulation 10(6) of TUPE provides that a complaint must be presented within six months of the alleged contravention to which it relates, or within 12 months “as the rights commissioner may consider reasonable.” 

The Adjudication Officer noted the findings of the Employment Appeals Tribunal (EAT) in the decisions in Morawska and others v DAA, which were considered to be clear regarding the requirement to submit a complaint concerning terms and conditions existing on the date of a transfer, within six or 12 months of the date of the transfer. 

The Adjudication Officer noted the decision of the Labour Court in December 2018 in CH Marine Limited and Ciarán O’Connor. Mr O’Connor transferred to CH Marine on 20 January 2017 and he submitted a complaint to the WRC on 27 October 2017 concerning a breach of TUPE. The Labour Court determined that his complaint was submitted outside the six-month time frame set out at Regulation 10(6) and he was not granted an extension to 12 months.

The intention of TUPE is that terms and conditions that apply to employees on the date of a transfer are protected and must transfer to the new employer. A timeframe of six months (or 12 months) is available within which a complaint can be submitted regarding terms or conditions which have been changed arising from the transfer. The complaint had been submitted for adjudication more than five years after the Complainant transferred to the Respondent in 2015. It is not a complaint that arose from the transfer but is a change required by the employer in the course of efforts to introduce efficiencies in their payroll system. The Adjudication Officer therefore found that the time limit for submitting this complaint under TUPE had expired.

Interestingly, the decision went on to note that TUPE were not intended to prevent a transferee from any contemplation of changes to their employees’ terms and conditions in the future, as this would have a stifling effect on an employer’s ability to introduce efficiencies. Following a transfer, the Adjudication Officer noted that the normal rules of engagement apply where an employer seeking to amend contractual terms and conditions must consult with their employees and seek to implement the change by agreement. This was an ongoing and dynamic process, and terms and conditions of employment are not “frozen” on the date of the transfer. As a change to the frequency of pay without agreement is a significant and disruptive matter for employees, this complaint requires to be considered under different legislation.

The takeaway for employers is that, if they have acquired a business, they are not free to do as they please with the employees’ terms and conditions but will need to make any changes in accordance with generally accepted processes, practices and procedures. For employees who may be dissatisfied with any of those proposed changes, TUPE may not necessarily be the grounding legislation with which to bring a complaint to the WRC and other remedies, including the Industrial Relations and Terms of Employment legislation may be more appropriate.