When an undertaking transfers from the ownership of one company to another under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), the obligation to consult is shared jointly and severally by all potential employers involved. In Tamang and anor v ACT Security Ltd and Euro Storage UK Ltd, the Employment Appeal Tribunal (EAT) said that a compromise agreement with one employer did not automatically bar a claim against another.
Basic facts
Mr Tamang and Mr Welilaka worked as security guards for Reliance at a site in Wembley.
On 1 April 2010, the owners, Segro, leased the site to Euro Storage UK Ltd. The two men were then told, without any prior notice, on 1 June 2010, that ACT Security Ltd had taken over responsibility for providing security at the site under a TUPE service provision change and they would no longer work for Reliance.
The two men brought a claim for failure to consult against ACT, Reliance and Euro on the basis that they were jointly and severally liable; and against ACT for unfair and wrongful dismissal. They then reached a compromise agreement via ACAS with Reliance which did not include ACT or Euro.
Along with a payment to each of the men, the agreement stated that it was “in full and final settlement of the Proceedings and of any claim he has or may have against the Respondent and/or the Group or any of their officers, staff or agents arising out of his employment or its termination or transfer to a third party including as non-exhaustive examples, any claim for a protective award for failing to consult, unfair dismissal, wrongful dismissal, breach of contract howsoever arising, discrimination or victimisation of any kind, redundancy pay, unlawful deductions from wages.”
Solicitors for the men and for Reliance wrote to the tribunal requesting that the tribunal dismiss the claim against Reliance only, as a result of the compromise agreement.
Tribunal decision
Relying on the legal reference book, Chitty on Contracts, the tribunal cited the rule that the discharge of one “joint debtor” discharges all debtors in accordance with the general principle that joint liability creates only one obligation.
It therefore decided that as there was only one “debtor”, then all three parties had been released as a result of the agreement with Reliance.
EAT decision
The EAT, however, disagreed, holding that the tribunal judge “miscategorised the compromise agreement” as it was not a release from a debt obligation, but a covenant not to sue.
Both the construction of the agreement and the joint letter itself (which referred to Reliance “only”) pointed to the conclusion that the agreement was an express covenant with Reliance which released it from any obligations it had to the men. The EAT also pointed out that there was no joint and several liability for the dismissal claim, and the tribunal judge’s finding that there was affected his approach and may have led him to fall into error.
Reliance was therefore no longer part of the proceedings and the claims against ACT and Euro should be restored.
Comment
This case provides confirmation that a claim can be settled against one party when liability is potentially joint and several, but depends on the terms used to settle such claims. The principles may be equally applicable to discrimination claims involving more than one respondent (employer). Although ultimately the claims against ACT and Euro were restored, the EAT also went on to say that “It may be that the monies paid to the Claimants will be brought into account by a Tribunal when it considers what is just and equitable to award them if they succeed in their case…”. So the EAT appeared to suggest that although the claim could be reinstated against the other respondents, this did not mean that the money could not later be taken into account by the tribunal when determining the appropriate compensation.