Lords amendment: No. 24, after clause 32, to insert the following new clause—Transfer of undertakings—
.—(1) This section applies where regulations under section 2(2) of the European Communities Act 1972 (general implementation of Treaties) make provision for the purpose of implementing, or for a purpose concerning, a Community obligation of the United Kingdom which relates to the treatment of employees on the transfer of an undertaking or business or part of an undertaking or business.
(2) The Secretary of State may by regulations make the same or similar provision in relation to the treatment of employees in circumstances other than those to which the Community obligation applies (including circumstances in which there is no transfer, or no transfer to which the Community obligation applies).
(3) Regulations under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.
§ Mr. Ian McCartney
I beg to move, That this House agrees with the Lords in the said amendment.
We indicated in our "Fairness at Work" White Paper our intention to revise the Transfer of Undertakings (Protection of Employment) Regulations 1981—commonly known as the TUPE regulations—to improve their operation. These regulations implement the European Communities acquired rights directive, and safeguard employees' rights when the business in which they work changes hands between employers.
Since the White Paper was published, we have agreed with our European partners a new, improved directive: that was a notable success for the UK presidency last year. The new directive sets out for the first time an explicit definition of the transfer of an undertaking. It also gives member states clear options to allow, but not require, independent workers' representatives to negotiate changes to terms and conditions to save jobs when the undertaking of an insolvent employer is transferred, just as they can in cases of insolvency when no transfer is involved; to provide that the transferor's outstanding debts in relation to the employees do not pass to the transferee, so as to save jobs when the undertaking of an insolvent employer is transferred; to ensure that the transferor notifies the transferee of all the rights and obligations that will be transferred in a relevant transfer so far as they are or should be known to the transferor; and to include all occupational pension rights within the terms and conditions that pass from the transferor to the transferee in a relevant transfer.
The amendment of the directive has laid the groundwork for our revision of the regulations. Officials in my Department are currently drawing up detailed proposals, in liaison with colleagues elsewhere in Whitehall and in informal discussions with the main employer and employee representative bodies and other outside interests, in line with social partnership principles. I am grateful for the constructive contribution that the Confederation of British Industry, the Trades Union Congress and others have made to this process.
There is a high degree of consensus on the main issues to be addressed in the revision of the regulations. That is particularly so in the area of public sector contracting, where we have been assisted by the TUPE forum, which is a representative body with members from the CBI, the TUC, Unison, the Construction Confederation, the Business Services Association, the Local Government Management Board, the Association of Direct Labour Organisations and others.
Our aim is to seek views on our detailed proposals by way of a formal public consultation document to be published a little later in the year, and to have the new requirements in place by next spring.
As this work has progressed, however, it has become clear that some of the changes that we may decide to make could not be achieved under the existing powers in section 2(2) of the European Communities Act 1972. In particular, extending the scope so as to give rights to individuals when they would not have them under the directive could not be done under those existing powers. That limits the options available for tackling two major areas of uncertainty in the regulations: their application to contracting-out operations and their application to transfers involving public sector bodies.
34 If we had to rely on the existing powers alone, we could be prevented from putting forward proposals to meet the widespread expectation—shared by employer and employee bodies alike—that the new regulations will apply comprehensively to changes that occur in service contracting. Specifically, it could prevent us from ensuring that recontracting or bringing back in-house of a contracted-out service was covered in cases where the conditions in the directive were not met, but where it was wished to provide consistent treatment.
The existing powers would also be insufficient to allow us to apply the regulations to transfers of purely administrative functions between public administrative bodies, should we wish to do so.
Amendment No. 24 seeks to remove those technical obstacles, so that we can be certain that we have sufficient powers to achieve what we are likely to be asked to achieve when we go out to formal public consultation.
I should stress that we are not yet ready to present our detailed proposals for revision of the regulations. Some difficult legal issues must be addressed, and my officials are still considering them. Besides, we are obviously not in a position to prejudge the outcome of the public consultation to which I have referred.
§ Mr. Tim Collins (Westmorland and Lonsdale)
May I express my hope, and that of many other Conservative Members, that the Minister receives the promotion that is due to him?
The Minister said earlier that consultation would take place in the autumn, and that proposals would be in place some time next spring. I appreciate that he may not be able to be precise, but can he give us some idea of the minimum period that will elapse between the conclusion of the consultation and the implementation of the regulations?
§ Mr. McCartney
I thank the hon. Gentleman for his initial comments. I do not know whether they were helpful or unhelpful, but they were certainly apposite, given that we are dealing with the transfer of undertakings from one job to another—although I am not sure that that covers Ministers.
The hon. Gentleman's main point is very valid. When my officials have completed their work, I shall be happy to give both the official Opposition and the Liberals a clear indication of the timetable for the proposals. That will involve consultation. This is the first opportunity that the Government have had, prior to consultation about specific regulations, to sit down with stakeholders and involve them in the preparation of a consultation document. When the timetable is produced, it will be as a result of agreement. The hon. Gentleman, however, asked a fair and reasonable question, and I shall answer it as soon as I can. If that is before the House returns from the recess, I shall write to him and to the Conservative and Liberal Democrat Front-Bench spokesmen, the hon. Members for Tiverton and Honiton (Mrs. Browning) and for Eastleigh (Mr. Chidgey).
The use to which the power will be put will, as I have said, be subject to consultation. That is why the amendment was drafted in relatively wide terms. I hope, 35 however, that by describing in some detail the purposes for which we expect the power to be used, I have been able to allay any fears that hon. Members may have had. I trust that I have succeeded in making clear what are undoubtedly complex legal points.
§ Mr. David Chidgey (Eastleigh)
It would be helpful if the Minister could clarify one point. He referred to the transfer of undertakings from the public to the private sector. May I take him back a few years, to a time when privatisation policies were in full swing and many public-sector agencies became private, contracted-out organisations?
In recent years, contracts have been re-tendered so that other private sector companies can bid for the privilege of undertaking the services. The Public Services Agency is an example. One problem that has arisen is exactly how the TUPE rights of workers are transferred to the second privatised employer who has contracted for those services. It has caused some confusion, and, as I think the Minister will know, what should happen is not made clear in the directive. Has the Minister taken this on board in the regulations, and, if not, can he assure me that he will?
§ Mr. McCartney
That is a fair and, indeed, important point. The whole purpose of agreeing the review with our European partners was to take account of exactly such issues.
Over the years, a complexity has arisen because of decisions made in courts and in employment appeal tribunals. There are grey areas applying to both employers and employees, which should not need to be there. A common approach is needed on the part of employers' and employees' organisations to put the matter right, which is why prior consultation is taking place. I trust that the consultation will address those issues fully and effectively, so that when the new proposals are introduced next spring there will be a sense of common ownership, and both rights and obligations in regard to what happens in the case of first, second and, potentially, third-generation contractual arrangements will be clarified.
§ Lords amendment agreed to.
§ Lords amendments Nos. 25 to 31 agreed to.