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 (IRLR 108, 2009), the Employment Appeal Tribunal (EAT) said if the transferor genuinely (but wrongly) believed that no staff would be transferred, it would not automatically be in breach of the duty to inform and consult.

Basic facts

Post Office Ltd (which operates a network of post offices) is a wholly owned subsidiary of Royal Mail Group (RMG). The network had been running at a loss for some time and a number of post offices had converted to franchises.

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. RMG therefore believed that no staff would be transferred under regulation 4 of TUPE when this occurred.

In June 2006 there was a trial transfer of 6 post offices into branches of W H Smith. The CWU, the recognised trade union, asserted that employees would automatically transfer and that the information and consultation regulations set out in regulation 13 of TUPE would apply.

RMG contended that given the policy that was in place, which historically had not been challenged by the CWU, no affected employees would transfer.

Relevant law

Regulation 4 states that a TUPE transfer does not terminate the contract of someone working for the transferor who is “assigned to the organised grouping of resources or employees that is subject to the relevant transfer”. 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 decision

The tribunal held that RMG had not genuinely believed that the automatic transfer principle was excluded. It reasoned that in communications to staff RMG referred to compensating staff for “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”.

The tribunal concluded that it was clear to RMG that some staff would automatically transfer pursuant to regulation 4 of TUPE and on this basis there had consequently been a breach of regulation 13.

EAT decision

The EAT held that RMG had misinterpreted regulation 4 of TUPE in that it ought to have realised that the automatic transfer rule applied to some of the staff. This was because anyone employed at the time of the transfer automatically transferred over to the new business, even if the employer had the right to exercise a mobility clause at the point of transfer.

Although none of the Royal Mail staff actually ended up working for WH Smith, some of them stayed in the business right up until the transfer took effect. In those circumstances the transfer took effect automatically unless the employee objected.

However the EAT stated this did not automatically mean that RMG was in breach of regulation 13. As RMG had genuinely believed that no staff would transfer under regulation 4, 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.

The EAT concluded that as there was no “cogent evidence” to suggest that RMG had not genuinely believed that none of the staff would transfer, the tribunal had not been entitled to conclude that RMG did not hold this genuine belief.