Competitive Tendering (Hansard, 19 November 1992)

§ Mr. Michael Forsyth

One of the provisions in the Trade Union Reform and Employment Rights Bill, published on 5 November, is to extend the applications of the Transfer of Undertakings (Protection of Employment) Regulations 1981 to transfers of undertakings which are notin the nature of a commercial venture".

These regulations provide for the transfer of employment rights when an undertaking is transferred to a new employer. There has been some misunderstanding about this amendment and its possible effects have been exaggerated in some press comments.

It has been suggested that the amendment extends the application of the regulations to the public sector and to compulsory competitive tendering for local authority services for the first time, and that people not covered in the past may now have a claim for retrospective compensation. The fact is that the regulations have always covered the public sector, including local authority services, as well as the private sector. Whether or not they apply in any individual case, however, depends on the facts of that case, and there are a number of tests to be applied.

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For example, it needs to be shown that an undertaking or part of an undertaking has actually been transferred. This test has always applied and will continue to apply.

The Government are of the view that the regulations will not normally apply where a local authority contracts out in-house services, since such a transaction does not generally involve the transfer of an undertaking within the meaning of the regulations. The facts need to be considered in each case to see whether all the necessary criteria which determine whether the regulations apply have been satisfied. There will be no change in this position as a result of the amendments to the regulations proposed in the Bill.

The only relevant changes we are making in the Bill are as follows. It will no longer be necessary to show that the undertaking is in the nature of a commercial venture and property will not have to be transferred for there to be a transfer of an undertaking. These changes are required to bring the wording into line with the EC acquired rights directive and to clarify its interpretation.

The changes in the Bill do not imply that past: cases should have been decided differently, because other criteria may have been relevant to those decisions; nor can it be assumed that future cases will be decided differently.