According to commercial law firm EMW, the Government risks starting a “wave of litigation” by changing employment regulations governing outsourced staff.
The Government is currently consulting on changes to Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), which protects employees from unfair dismissal, cuts in pay or changes in terms and conditions of employment if the business in which they are employed changes hands.
There are some employers who believe that the protection is extreme and makes it very difficult to restructure contractor teams or improve the performance of contractor staff.
EMV states that these concerns provoked the Government to open a consultation on removing this protection from outsourced staff as part of its “Red Tape Challenge”.
However, EMW says that the proposed changes would actually create uncertainty over whether such changes in contractor are caught by TUPE at all.
Furthermore it claims that this this would leave employers in the dark over whether these workers are protected by the law or not, increasing the likelihood of litigation between businesses and outsourced employees over the matter.
Jon Taylor, Principal at EMW, said:
“At the moment, re-tendering an outsourced contract can effectively result in a business getting the same staff working in a different uniform, so that the quality of service and most of the costs stay exactly the same.
“Many businesses say that the law goes too far, and gives businesses far too little scope to gain improvements in performance and efficiency if they switch contractors.”
He added:
“This is something that needs to change, but the proposals put forward by the Government will not solve this problem, and will create a bigger one instead.
“The law will give no certainty on whether businesses can freely restructure their contractor staff or not, and this legal uncertainty is likely to start a wave of litigation over the issue.”
EMW also said that businesses would benefit from certainty over their legal responsibilities regarding outsourced staff.
Jon Taylor said:
“Given the uncertainty of the proposed regulations, no business will want to be the first to test the new legal situation. With no clear statutory guidance, the first business to use these new ‘freedoms’ regarding contractors could well find itself footing a major legal bill, and potentially a compensation claim too.
“It is vital that any changes to TUPE should be absolutely clear to what extent outsourced staff are protected by the law. This will result in time and cost savings for businesses, rather than a morass of litigation.”
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