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Gibson Dunn - The Fashion Law and Business Report > Posts > Recent Changes in UK Employment Law Impact Fashion and Retail Companies
2.4.14
Recent Changes in UK Employment Law Impact Fashion and Retail Companies

Recent  changes in UK employment law, which ease restrictions on outsourcing, may make it easier for fashion and retail companies operating  UK businesses to “outsource” functions, such as catering, security and IT.

Employers in the fashion and retail industries are likely to have particular aspects of their operations which may be “outsourced” to a third party provider. For example, the cleaning of offices or retail premises may well be outsourced to a contractor cleaning company (i.e. the cleaners are employed by that company and not the fashion or retail business). Special care must be taken when deciding to outsource functions, changing third party providers, or indeed bringing those functions back “in-house”, as specific rules apply in the UK by virtue of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”"), which have been recently amended. 

The TUPE Regulations are designed to protect the rights of employees who are affected by an outsourcing or change of service provider, as well as those affected by the sale or transfer of the whole or part of a business or undertaking (i.e. in a merger or acquisition situation).  Key changes were introduced in 2013 to limit the application of TUPE to outsourcing transactions and extend the rights of UK employers in TUPE cases to change terms and conditions of employment and/or to dismiss employees for a reason connected with the transfer of a business or outsourcing/insourcing activity. Furthermore, some helpful changes have been made in relation to an employer’s information and consultation obligations in these circumstances. As a result of the changes, fewer outsourcing transactions may be caught by TUPE.  The amended regulations clarify that TUPE will only apply in the context of an outsourcing or insourcing when the activities that are to be carried out are “fundamentally the same” (the meaning of which will be determined by the UK courts and employment tribunals).

A more complete summary of these changes can be found in the full Gibson Dunn client alert found here.

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