TUPE reform ‘not enough’.

Changes to the Transfer of Undertakings (Protection of Employment) legislation merely tinker on the edge of a wider problem, according to a leading insolvency practitioner.

The changes, proposed by trade secretary Patricia Hewitt at the Trades Union Congress conference, are aimed at making ‘the process of business restructuring and public sector modernisation less threatening to employees and smoother to operate for employers’.

The main proposals currently under consultation include options for new rules as to when TUPE legislation applies, greater flexibility of transfer regulations to make the sale of businesses more attractive and more clarity on the terms and conditions of transfers at the sale of a business.

The changes come as an implementation of an EU directive on acquisition rights, which was last reformed earlier this year. These amendments are to be adopted into member states’ legislation by 2002.

The majority of turnaround professionals, including R3 the Association of Business Recovery professionals, welcome these changes.

R3 president Roger Oldfield said: ‘Reform will be great news for businesses and even better for employees. The insolvency profession has been calling for the re-examination of TUPE regulations for some time’

But turnaround professional Phillip Sykes, senior partner at Moore Stephens, said that, although he welcomes any reforms on TUPE legislation, the changes made are ‘tinkering at the margin’ of what the directive allowed.

According to Sykes the reform could have been bolder and the government missed its opportunity to prevent employees’ claims from being transferred to the buyer.

Calling the current reforms a ‘halfway house’, Sykes explained: ‘The redundancy fund will pay up to the maximum, but anything else still passes to the transferee.

‘They had the opportunity that this shouldn’t pass to the (buyer), which under the current circumstances would have made life a lot easier.’

He added the real problem comes when there is a substantial payoff because of generous redundancy packages.

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