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 »

Thursday, 16 July 2020
Overseas Special Interest Group Online Meeting Series More »

News »

Wednesday, 24 June 2020
Our commitment to diversity, equality and inclusion 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

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

Summer Economic Update

Charities are facing a £12.4bn shortfall in income for the year due to impact of coronavirus

Charity Commission guidance on Serious Incident Reporting during the coronavirus pandemic

How to guide: Covid 19 Charities SORP Committee Guidance

From red to green, but what does it mean for us?

What does the chancellor’s announcement mean for charities?

Charities and insolvency

#EveryDayCounts – The Florence Nightingale Museum

Leading in a crisis: Mark Goldring's lessons from personal experience

Caron Bradshaw appointed as a member of new SORP Committee

Sector bodies issue joint proposal for Chancellor ahead of March's Budget

What’s new for audit and accountancy?

Election result reinforces our mission and purpose

Has the Charity Commission has taken the wrong tone in its election guidance

Why does the narrative around public 'trust' makes me feel so uncomfortable?

Why safeguarding is vital for finance leaders

The lessons for Oxfam and the wider sector

Finance Focus July 2019

BEIS Review of the Financial Reporting Council

CFG Annual Handbook 2019

Economic Outlook Briefing 2019/20

How the best boards do it, from preparation to meeting execution

Seeing the wood for the trees

Charity Property Matters Survey 2018

CFG responds to the Charity Commission’s consultation on the SORP-making process

What the recent SCOTUS judge controversy can teach us about the Charities’ SORP

Annual Report 2017-18: Empowering Your People

Changes to the CFG Board of Trustees

10 questions to ask before borrowing

Large Charities Focus

“Who moved the cheese?” The case for innovation in the UK charity sector

Economic Outlook Briefing 2018

Charities need to find nearly £4bn additional income by 2020 finds CFG

The key to good governance - truly understanding the business

Essential Charity Finance for Trustees Guide

Does your charity follow serious incident reporting guidelines?

Charity finance professionals need to be aware of new automatic disqualification rules

How big a threat is property to your charity?

Money is not the issue when it comes to charging for Charity Commission

How can charity investors perform better in a volatile market?

A stairway to heaven on business rates for the charity sector?

What do the latest Budget 2017 economic numbers mean for charities?

Live Blog: Autumn Budget 2017

Investing in financial governance is one of the most cost effective ways to help your charity

What should charities expect from the Autumn Budget 2017?

Sarah Atkinson - Have your say on the annual return for charities

New report raises concerns about complacency on financial governance

Trustee Survey Report

Time to review your risks? An update from the experts...