Before transferring their business to someone else, employers are supposed to inform and consult their employees about it.
In Sweetin -v- Coral Racing, the employment appeal tribunal (EAT) said that if they don’t, the compensation they owe will be assessed along the same lines as employers who don’t consult in redundancy situations.
What were the basic facts?
Ms Sweetin had worked as a clerk (and, on occasion, the deputy manager) in the same bookmakers shop since 1980. In 1995 it was taken over by Toal’s and, subsequently, at the end of September 2003 by Coral Racing.
Just days before the transfer, the regional manager visited the shop and suggested that the other clerk become the deputy manager. This was because the company had a policy requiring the deputy to fill in when the manager was away. Ms Sweetin was married to the manager and went on holiday with him.
A series of meetings then ensued, as a result of which Ms Sweetin understood she could not be deputy manager any longer, although no one actually said so. She was, however, told that her terms and conditions would remain the same.
She finally went off sick at the end of November 2003 and resigned shortly afterwards, saying that she had lost all trust and confidence in the company and claimed constructive dismissal.
The tribunal said she had not been constructively dismissed, but awarded her six weeks’ pay as compensation for the company’s failure to inform and consult her about the transfer.
What did the parties argue on appeal?
Ms Sweetin said that Coral Racing had an implied duty to deal with her grievance quickly and that she had lost all trust in them when things dragged on. They were therefore in breach of the implied duty of trust and confidence and, as a result, she had been constructively dismissed.
She also appealed against the tribunal’s award of six weeks’ pay for the failure to consult.
The company, on the other hand, argued that, in order to deal with a grievance quickly, it had to know there was one. The tribunal said that the company did not know about it until mid-November. Ms Sweetin had resigned shortly afterwards.
As for the failure to consult, this was an oversight, not a deliberate policy by the company and the tribunal had the right to take that into account when calculating compensation.
What did the EAT decide?
The EAT agreed with Ms Sweetin that there was an implied term that employers should deal with grievances promptly. But failing to do that did not automatically result in a finding that there has been a breach of the duty of trust and confidence.
In particular, it said that employees cannot complain that their employer has failed to deal with their grievance if the employer doesn’t know about it. In this case, she had not given her employers a chance to deal with her grievance once they found out about it, and her claim for constructive dismissal could not succeed.
Turning to the question of compensation for the failure to consult on a TUPE transfer, the EAT said that tribunals should approach the issue in the same way as in a redundancy situation. The tribunal in this case had therefore got it wrong.
Instead of assessing the extent of Ms Sweetin’s loss, it should have focused on the “punitive and deterrent nature of any such award”, as in the case of Susie Radin Ltd -v- GMB & Ors (LELR 90).
It should also have considered whether there were any mitigating factors, and having found that there weren’t, should then have assessed the company’s failure at the top end of the range of possible severity.
Given the circumstances, the tribunal should not have awarded anything less than the maximum 13 weeks' pay.