Blog

Governance, regulation and compliance Financial sustainability

14 March 2013, 12:10

De-regulation for the sake of it?

Post byKatherine Smithson

Where next?

Events »

Monday, 11 October 2021
Annual Conference 2021 More »

News »

Tuesday, 13 July 2021
CFG responds to government consultation on restoring trust in audit and corporate governance More »

The Government’s ‘red tape challenge’ sounds like some sort of physical assault course; conjuring images of hapless workers wading through paperwork, red tape tied round their ankles, tripping over giant copies of the tax code and stumbling into open filing cabinets spilling over with old employment contracts. Underneath the rhetoric, the implication is that the current state of ‘regulation’ hinders business and innovation; the Government wants us to tell them what bits to scrap. Unless talking about bankers, the idea that regulation is a catalyst for fair business is all but lost. This is despite the fact that we have seen that a lack of it doesn’t always lead to the most, ahem, ‘ethical’ business behaviour. When the red tape challenge first opened the issue of TUPE stood out as an issue for a range of business. TUPE is about when services are transferred from one entity to another, ensuring that employees caught in the middle are not unfairly left without a job or with dramatically different conditions. The TUPE 2006 regulations are based on an interpretation of an EU Directive. This all seems fair enough, but there is often a lack of understanding as to where TUPE applies. Some parts work better than others, and this has a huge impact on business transactions because it can conceal some hefty employee related liabilities. The recently released Government consultation on TUPE demonstrates the age of de-regulation we’re in. If an element within a set of regulations is complex or difficult to understand then let’s revoke it – there, problem solved?! Not always. At first glance there are two groups to consider, the employers, and the employees. Responses to an initial call for evidence from the department for Business Innovation and Skills (BIS) in 2012 reflected this. Unsurprisingly, Unions are quite happy with the interpretation of the Directive in TUPE 2006, which possibly errs on the cautious side. If anything, they want greater clarity and security for the employee. Business representatives have a few more issues. TUPE negotiations and the associated costs can be painful for business and charities alike. The importance of protecting employee rights is recognised across the board; however, when there is uncertainty around liabilities, the risk profile of a contract quickly goes through the roof doing little to help the employer or employee. So in the vein of cutting red tape, the Government have signed up to the idea that TUPE 2006 has ‘gold-plated’ some or all of the requirements of the Directive, and they have opted to ‘de-regulate’. The problem is it’s not actually what was asked for, or at least not everywhere. All but ignored is the fact that employers also consist of two separate groups, that is, the transferor (previous employer) and the transferee (new employer). While some de-regulation will support swifter movement of staff and assets from one to another, it is less helpful in other areas. Critically it is least helpful in areas where those taking on employees as part of a contract are reliant on the provision of timely and accurate information from others - a familiar situation for charities delivering public service contracts. The BIS summary of responses to their initial call for evidence clearly stated ‘Nearly 20% of respondents…indicated that the current requirement to provide Employment Liability Information (ELI) at least 14 days before the transfer is insufficient’; note that these statements were un-solicited. It also summarised that responses felt the 14 days ‘should be increased, as it is felt that it is too close to the transfer...’ There is little incentive for the transferor to provide ELI at an earlier stage than required by the regulations, why would they? The other business might be a competitor and it opens them up to a degree of commercial vulnerability. A year later, the new proposals for TUPE, made in the recent BIS consultation, will hopefully afford some flexibility to the transferees. However, when it comes to improving the flow of information to the new employer the Government have dealt a bit of a blow, proposing to repeal the requirements around ELI altogether, ‘but making it clear that the transferor should disclose information to the transferee where it is necessary for the transferee and transferor to perform their duties….,’ although it seems highly unlikely that the two organisations will agree when this time has come. Justification backing up the repeal is based on assumptions that information transfer is only an issue where Service Provision Changes have occurred – and these have also been repealed – but this provides little reassurance. There is a real risk that this measure will increase rather than decrease the level of dispute around information transfer. This will increase the level of uncertainty and risk for charities that are tendering for public sector contracts, meaning that they will still potentially be in a position where they are taking on liabilities that they did not know about and cannot afford. De-regulation for the sake of de-regulation does not necessarily lead to smooth business. Instead regulatory and de-regulatory measures should both enable flexibility and faster, more efficient, more transparent business transactions. In the case of TUPE, the challenge is getting this balance right, where you cut the tape, and where you might stick a bit more on; less of an assault course and more of an intellectual puzzle. This could not only make the situation clearer for the two employers and for the commissioner, but it will also provide much greater reassurance for the employee and ultimately provide better continuity and protection for the service. « Back to all blog posts

Blog

De-regulation for the sake of it?

Related Content

POLICY: Response to the BEIS consultation on restoring trust, July 2021

Finance Focus May 2021

Finance Focus April 2021

Finance Focus January 2021

Finance Focus November/December 2020

What does the Spending Review mean for charities?

Three-year Comprehensive Spending Review replaced

Finance Focus September

Finance Focus August

Finance Focus July

Top ten tips for how to handle the year end in a pandemic

Civil society asks of the Spending Review 2019

Five takeaways from August’s Inflation Report

Finance Focus May 2018

Where are the ‘automatic stabilisers’ for charities income?

6 simple steps your charity can take to help protect themselves from fundraising fraud

NCVO Almanac points to fundamental shifts in the charity operating environment

Better partnerships needed between finance and fundraising teams

IFS 2017 Green Budget – the good, the bad, and the worrying?

Tony Armstrong looks at Devolution: working with local organisations to transform public services

Devolution is our chance to advocate for the most vulnerable

How will the 'devolution revolution' be financed?

Caron asks: 'Why does the voluntary sector need a devolution summit?'

Do charities need to become social enterprises to survive?

EU Referendum: Keep watching this space…

EU Referendum: What could this mean for charities?

Hunting for the silver lining; the IFS, the economy and charities.

What did the Romans ever know about data protection?

Just one thing, Sir John...

The time for ‘rational optimism’ – A response to Matt Ridley

How much do we know about PbR?

Can charities help end the ‘pushmi-pullyu’ of local government spending to support prevention?

Fog of uncertainty makes post-election planning difficult for charities

Vision for sector post-2015. What did the politicians have to say at the CFG Annual Conferece?

Managing in a Downturn Report Reflections....

A change in economic outlook- is your charity sinking or swimming… tell us!

2014, politics, and charities

Public service delivery is risky business

New report reveals sector's foreign exchange challenges

CFG responds to government consultation on restoring trust in audit and corporate governance

An enlightening experience

CFG joins with partners to produce Charities Bill briefing

Facing organisational endings

Finance Focus June 2021

RESEARCH: No bounce back for charity fundraising events in 2021

Member Focus: How small charity Making Music is fine-tuning to support musicians during Covid

What does the Queen’s speech mean for charities?

Rainy days and reserves

UK Aid cuts will have devastating impact on smaller charities

Finance Focus March 2021

#NeverMoreNeeded coalition reacts to Budget 2021

Caron Bradshaw OBE reacts to Budget 2021 announcement

CFG Briefing: Budget 2021

Finance Focus February 2021

#RightNow campaign gets off to a flying start

Press Release: Civil society calls for government action #RightNow

Why government needs to listen #RightNow

Winter fundraising chill heralds more charity cuts

How to share your story through your annual report

Brexit and beyond: Civil society must keep pushing on what matters

CFG reiterates call for fit-for-purpose CJRS

Charity sector calls for emergency support package

Media release: Charity sector innovation boom set to last beyond pandemic

We will keep “raising the alarm”

And then the world turned upside down…

Tessy Ojo CBE kicks off CFG's Annual Conference 2020

The balance between giving and receiving: Why CFG is (temporarily) closing in mid-December

CFG gives small charities a boost with launch of new bursary scheme

CFG's initial comment on the government's Spending Review

Are you Brexit ready?

This is an emergency! CFG asks civil society to #MobiliseNotMothball and get behind its urgent message to government

Civil society urges Chancellor to urgently make job scheme fit for purpose

Coronavirus Job Retention Scheme extended into the spring

The boy who cried wolf

Press release: Charities fear Christmas cash crisis

Finance Focus October 2020

CFG responds to news of charity sector redundancies