Employers have a duty to inform and consult with “affected employees” in the event of a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). In I Lab Facilities Ltd v Metcalfe and ors, the Employment Appeal Tribunal (EAT) said that when only part of the business transferred and the other part closed down, the employer did not have to inform and consult employees working in the part that closed down.
Basic facts
In April 2009, two film production companies - I Lab (UK) Ltd and RKT Post Production Ltd - merged. I Lab (UK) specialised in rushes and the latter in post production work. Although there was some overlap , the core activities remained distinct and the staff continued to work in different locations doing different kinds of work at different hours.
Soon after the merger, I Lab (UK) Ltd got into financial difficulties and went into liquidation. It sold part of the merged company to I Lab Facilities Ltd. Although the employees doing the post production work were initially told they would transfer over, the situation changed and in the end only the rushes work transferred.
The post production employees brought claims for breach of the information and consultation requirements under regulation 13 of TUPE on the ground that they were affected employees.
Relevant law
Regulation 13(1) defines “affected employees” as any employees of the transferor or transferee (whether or not assigned to the organised grouping of resources or employees that is the subject of a relevant transfer) who may be affected by the transfer or may be affected by measures taken in connection with the transfer”.
Regulation 13(2) states that: “Long enough before a relevant transfer to enable the employer of any affected employees to consult the appropriate representatives of any affected employees, the employer shall inform those representatives” ... about the fact of the transfer, the implications of it and the “measures” that might be taken in relation to the “affected employees”.
Tribunal decision
The tribunal upheld their claim, finding that they were employees who might be affected by the relevant transfer. In particular, it held that they were clearly affected by the transfer because they were effectively excluded from it and that if they were not re-hired, their jobs were in jeopardy as a result of the proposed transfer.
EAT decision
The EAT held that there was no duty to inform and consult because the post production employees did not transfer and were not affected by the transfer. Although they were affected by the closure of the part of the business in which they worked, they were not affected by the transfer of the other part of the business.
The EAT also held that there can be no breach of the duty to inform and consult if the transfer does not go ahead. This did not mean, though, that the obligation to inform and consult could never arise in respect of employees who did not transfer, since the definition of “affected employees” includes those who are not assigned to the part of the business which transfers. For example, an employee might well be affected if they did some work in the part of an undertaking that was transferred, since the loss of that work would affect them.