'TUPE is the human resources dir ectors' favourite -- or should it be least favourite -- subject,' says John McMullen, national head of employment at Pinsent Curtis Biddle.

The acronym for a law, which potentially comes into play every time a business employing people changes hands, has brought a stream of business over the years, because, as Mr McMullen says: 'The HR directors all know what it is, but they also know that it is a minefield and that they need advice.'TUPE reached the public and political agenda last month when the Secretary of State for Trade and Industry, Patricia Hewitt, was scheduled to address the delegates at the Trades Union Congress conference in Brighton.

Union anger about the government's policy of introducing private finance and management into public services was growing, and to defuse the tension the Department of Trade and Industry (DTI) unveiled a consultation document on the future of TUPE, with accompanying promises that it would safeguard workers' rights.Mr McMullen notes: 'It is overdue, and it was suddenly sprung on the Monday afternoon of the TUC conference.'There is nothing new about TUPE (less well known as the Transfer of Undertakings (Protection of Employment) Regulations 1978), which is the British implementation of a 1977 European Union directive.

Initially, it was poorly drafted, and did not protect public sector employees, but a European Court of Justice decision in 1992 extended the protection.Yet Stephen Brown, a partner in the London employment unit of McGrigor Donald, says non-experts still think transferring hospital cleaning and so on to the private sector is a way to pay fewer workers less to do longer hours because of the deals that went through in the early years before the European judgment.In fact, Mr Brown emphasises, under TUPE as it is now, there are already substantial guarantees of employees' rights.

'There can be no change to terms and conditions.

An employee who transfers under the regulations must do so on exactly the same terms and conditions as he enjoyed with his original employer.

It has the effect that the original employer's name on the contract of employment is deleted and the new employer's name is inserted in its place.'According to Susan Malyon, an associate at London firm CMS Cameron McKenna, one of the firms behind the Private Public Partnership Forum lobbying group, in most cases employment tribunals have tended to bend over backwards to find a solution that secures the protection of employment, consistent with being the right result.The effect of the proposals in the consultation paper would be to make it clearer which cases they apply to, and the discussions have been going on behind the scenes for a long time.Mr McMullen says: 'The original TUPE directive has become a bit old-fashioned and does not meet concepts like outsourcing and that sort of thing.

It was due for revision in the early 1990s [in the EU] but no one could agree on a definition of outsourcing.

The confusion over when it did or didn't apply was getting so intense in the UK that when the Blair government got the presidency of the Council of Ministers in the first half of 1998, they decided to rush through a new directive.'He says the UK has been dithering since then, and has already missed the date for implementing the new directive.

Legislation should have been in place by July this year.

He says it is likely to be next March before the results of the present consultation are introduced.The delay has been the result of months of behind-the-scenes discussions between the various sides, he says.

'Draft a fter draft has been going backwards and forwards between the Department of Trade and Industry and a body called the TUPE Forum, a loose grouping of DTI civil servants, local authorities, trade unions and the Confederation of British Industry.'The consultation document does propose an addition to what is there now, with the protection of pension rights.

This is the major area of employment rights which are currently not protected.Mr McMullen says this will be controversial when it comes to the private sector.

It is already invariably the case in practice that when public sector workers are transferred to a private employer, they will be offered equivalent pensions as a condition of the tender, even though there is no legal obligation to do so.

But when private employees are transferred to another private employer, there is no guarantee that pensions will be as good.

This means a workforce can lose its pension provision when a cleaning contract is transferred for a second time.So, extending pension guarantees to transfers involving public employees would be a legal change but not a change in practice.

Lawyers say it would be logical to extend TUPE to private employers' pensions as well.

But as Elizabeth Slattery, employment partner at City firm Lovells, says: 'In an ideal world there would be no difference.

But it might be a step too far for employers to extend it to the private sector as well.'The proposals are not all in favour of the employee.

For one thing, greater certainty about when TUPE applies would benefit both sides.

Most of the current confusion concerns not the degree of protection afforded by TUPE, but whether a particular transfer of a group of workers qualifies for the privileges under the complex legislation and case law about what is a transfer and what is a new employment.And the only way an employer taking on a group of workers can find out, says Ms Slattery, is either to assume TUPE does apply, or to say it does not and take the risk that the employees might go to an employment tribunal.

More reputable companies tend to take the safe option, while most of the case law has been at the bottom end of the outsourcing market, Mr McMullen says.The document does propose offering greater flexibility to employers wanting to vary terms and conditions when they take over a TUPE transfer.

Mr Brown says a 1998 House of Lords judgment, Wilson v St Helen's Borough Council [1999] 2 AC 52, means that conditions may not legally be varied, even by agreement with the workforce, or if one benefit is replaced by a different and better one, such as more pay to buy out a day off.Ms Slattery cites, as an example of how this might be unreasonable, a group of IT workers with a brewer, who might be outsourced to an IT specialist.

There is no reason why they should be able to keep the right to a free beer allowance, which was given to all the brewery's staff.

At the moment under a TUPE transfer, they keep that entitlement.'It is not that employers necessarily want to introduce worse rights on the workforce, just different ones,' she says, with the aim of harmonising their conditions with those of their new co-workers.It seems likely, Mr Brown says, that this issue may be resolved in the proposed legislation by allowing the management to change the terms if there is an economic, technical or organisational reason why they need to do so, but also if it is by agreement.Ms Slattery says that currently if they negotiate changed conditions amicably, they are taking the risk that they will be taken to a tribunal and lose.Will t he greater certainty that the changes are likely to bring be bad new for lawyers, who flourish in an atmosphere where their helping hand is needed to make a contract watertight, with comebacks and cover in the event of any possible outcome? Mr Brown says not.

'I think most solicitors would rather be able to offer firm advice,' he says.

'It is better for credibility.'The consultation paper and a detailed background paper are available from the DTI Web site.

Visit: www.dti.gov.ukResponses are required by 15 December 2001.