It’s good to talk
Claire Astin, of Thompsons Trade Union Law Group, looks in detail at the requirements that the law imposes on employers to inform and consult employees who are affected by a proposed TUPE transfer.
When a business transfers to a new owner, workers’ jobs are generally protected by the rules contained in the Transfer of Undertakings (Protection of Employment) Regulations 2006 (better known as TUPE).
Relevant transfers
The first thing to ascertain is whether TUPE applies, as not all transfers are covered. There are two kinds of relevant transfer under the legislation:
• a business transfer (when an economic entity which retains its identity) transfers from the old employer to the new employer, for example on the sale of a business
• a service provision change, which can apply to the contracting out, contracting in or re-tendering of a service contract.
Examples of TUPE transfers include:
• when a company or part of it is bought by another company (except for share acquisitions)
• when two companies merge to form a new company
• when there is a dedicated team of employees working on a particular contract and that contract is re-tendered or brought back in-house
• when activities such as cleaning or security are outsourced by a company to a contractor.
Generally, when TUPE applies, the jobs of employees who are “assigned” to the business or to the contract being transferred, will automatically transfer to the new employer. They then retain their current terms and conditions, as though their contract had always been between them and the new, transferee employer.
Appropriate representatives
Regulation 13 of TUPE states that “appropriate representatives” of the employees affected by the transfer must be given certain information.
If a union is recognised for collective bargaining purposes in relation to all or some of the affected employees, the employer must inform and consult that union as the “appropriate representative” for those employees.
If a union is not recognised, the “appropriate representative” will be either an existing employee representative or, if there are none, the employees must be allowed to elect a new rep.
Obligation to provide information
Regulation 13(2) of TUPE states that employers must provide the following information to the recognised union, or to the employee representatives:
• the fact that the transfer is to take place, the date or proposed date of the transfer and the reasons for it
• the legal, economic and social implications of the transfer for any affected employees
• the measures the employer envisages taking in connection with the transfer (such as a business re-organisation) or, if they do not envisage taking any, they must make that clear
• the measures the employer envisages the transferee will take in relation to any employees who will transfer over or, if none are envisaged, they must make that clear.
In the recent case of Cable Realisations -v- GMB, the appeal tribunal stated that, even if the transferee did not envisage taking any “measures” in relation to the transfer, this duty to inform and consult still applied.
However, in another recent case (Royal Mail Group Ltd -v- Communication Workers Union), the Court of Appeal said that, if an employer thinks that no staff are to be transferred (whether rightly or wrongly), that will not necessarily amount to a failure to inform.
The employer only has to tell the union what steps they actually propose taking with regard to the transfer “not what [they] ought to be proposing to do” had they interpreted the law correctly.
Finally, the requirement to provide information about “measures” only applies to those measures that the transferor employer “envisages” that they and the new employer will take. That leaves union and employee representatives largely reliant on the new employer to provide all necessary information to the current employer regarding these likely measures.
Duty to consult
The right to be consulted is separate from the right to be informed about a TUPE transfer. Under regulation 13(6) of TUPE, the union or employee representative has a right to be consulted if either the old or new employer envisages taking measures in relation to any of the employees affected by the TUPE transfer.
The measures must amount to definite plans and proposals and must be things that would not have happened but for the TUPE transfer. If no such measures are anticipated, there will only be an obligation to inform appropriate representatives of that fact and no duty to consult.
The consultation must also be undertaken with a view to seeking the agreement of the union or employee representative. The employer must consider and respond to any representations made by the union or the employee representative.
If the employer rejects the representations, they must give reasons for doing so.
Although this clause applies to both the new and old employers, the new employer does not have to consult following the transfer, according to the decision of the appeal tribunal in Amicus -v- Glasgow City Council.
Timing
Unlike the provisions governing collective consultation in redundancy situations, there are no precise time limits by which employers must provide the required information and consult in a TUPE situation.
Regulation 13 of TUPE simply states that the information must be provided “long enough before a relevant transfer to enable the employer ... to consult the appropriate representatives...” and is therefore a matter of fact and degree for the tribunal to decide.
However, following the decision in Cable Realisations Ltd -v- GMB Northern, employers must ensure that they provide the information in sufficient time for voluntary consultation to take place, even if they do not envisage taking any measures and there is therefore no statutory obligation to consult.
Special circumstances
Although there are no circumstances when employers do not have to consult, they can claim that there were “special circumstances” which meant it was not “reasonably practicable” for them to comply, in which case they only have to take such steps as are reasonably practicable in the circumstances.
As with collective redundancies, this “special circumstances” defence is only likely to succeed if the employer can convince an employment tribunal that a sudden and unforeseen event prevented full consultation from taking place.
Tribunal claims
If either the old or the new employer fails to comply with the obligations to inform and consult (either completely or in part), the union or employee representatives can pursue a tribunal claim under regulation 15.
If the appropriate representative is the union, the claim must be brought in the union’s name. If there are any issues regarding the extent or scope of the union’s recognition, however, the claim should also be issued in the names of the individual employees affected by the failure.
Likewise, if the appropriate representative is an employee representative, they must bring the claim. And, if there are no employee representatives, then it must be brought by the affected employees themselves.
If the claim succeeds, the tribunal may award compensation of up to 13 weeks’ pay to each affected employee. This is based on the employee’s actual gross pay and is not subject to a statutory cap.
It is a punitive award, based on the justice (or injustice) of the employer’s actions, rather than being based on the amount of any loss sustained by the employee, according to the decision of the Court of Appeal in Susie Radin Ltd -v- GMB and ors (see previous article by Joe O’Hara for more detail).
As both the old and new employer may be found liable to pay the compensation (or it could be split between them both), it is important to issue the claim against both employers. This should be done within three months less one day from the date of the transfer.
TRADE UNION LAW GROUP
Thompsons has established a national Trade Union Law Group, comprising specialist lawyers at national level and in the regions. The group is led by Richard Arthur, who is based in the firm’s Bristol office.
Operating in accordance with trade unions’ usual arrangements with Thompsons, the group provides specialist advice and representation in all areas of trade union law such as industrial action, recognition, rule book issues, elections and complaints to the Certification Officer.
The group also acts as a specialist resource on all aspects of collective employment law, including TUPE, information and consultation and trade union victimisation.
Members of the group are regularly involved in high profile national industrial disputes.
The group aims not only to advise and provide representation on existing matters, but also to assist in strategic forward planning in relation to changes to the law and possible future legal challenges.
Examples include the issue of social clauses in public procurement, the implications of the Viking and Laval cases from the Court of Justice of the European Communities and the evolving law under Article 11 of the European Convention for the Protection of Human Rights and Fundamental Freedoms.