No guarantee

Royal Mail Group Ltd v Communication Workers Union

Under the 2006 Transfer of Undertakings (Protection of Employment) Regulations (TUPE), employers have to inform and consult with recognised unions about the possible implications of the transfer for affected employees. In Royal Mail Group Ltd v Communication Workers Union, the Court of Appeal said that as long as employers genuinely believe their interpretation of the regulations, they do not have to guarantee its accuracy.

Basic facts

Royal Mail Group (RMG) operated a network of post offices which had been running at a loss for some time. A number had converted to franchises and in June 2006 there was a trial transfer of six post offices into branches of W H Smith.

RMG had a policy whereby affected employees would be given the choice of voluntary redundancy or redeployment when a post office converted into a franchise. It believed that, although TUPE applied, no contracts (and therefore no staff) would be transferred under regulation 4 when this occurred.

The CWU, however, argued that employees would automatically transfer and that the information and consultation regulations set out in regulation 13 of TUPE would apply.

Relevant law

Regulation 4 states that a TUPE transfer does not terminate the contract of someone working for the transferor. Instead that person transfers over as though their original contract had been with the transferee.

Regulation 13 states that employers must inform and consult with the appropriate representatives of any affected employees about “the legal, economic and social implications of the transfer for any affected employees ..”

Tribunal and EAT decisions

The tribunal held that RMG had not genuinely believed that the automatic transfer principle was excluded, not least because it had told staff about “waiving their right to transfer to WH Smith under TUPE” while at the same time making assertions that colleagues “do not have a right to claim TUPE”. RMG therefore knew that some staff would automatically transfer under regulation 4 and there had consequently been a breach of regulation 13.

The EAT (see weekly LELR 107) held that RMG had misinterpreted regulation 4 in that it ought to have realised that the automatic transfer rule applied to some of the staff. However this did not mean that RMG was in breach of regulation 13. As it had genuinely believed that no staff would transfer, regulation 13 only required it to tell the union what steps it actually proposed taking with regard to the transfer “not what [it] ought to be proposing to do”. RMG had done this by identifying the measures it proposed to take on the basis of its interpretation of regulation 4.

Court of Appeal decision

And the Court of Appeal agreed. It held that although employers should know “what the legal implications are so that the employees can be informed”, that did not mean that employers must “warrant the accuracy of the law”.

Turning to regulation 13, it said that if employers were required to guarantee the legal implications of a transfer, then given the way it was worded, they would be expected to guarantee the economic and social implications as well which would be virtually impossible.

The Court concluded that it was very difficult to be certain about the legal implications of a transfer and that as it was important to encourage consultation and debate, it seemed unlikely that the regulations should be interpreted in such a way that employers could not say that the legal implications were unclear “where they are unclear, so that there can be a proper debate about it. An obligation to warrant the accuracy seems to make it impossible for an employer to say that the answer is not clear”.