The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) state that employers must tell appropriate representatives the reasons for any proposed transfer. In LLDY Alexandria Ltd v Unite the Union and anor, the Employment Appeal Tribunal (EAT) held that employers must provide all the reasons for the transfer, not just some of them.
Unite the union instructed Thompsons to act on behalf of its members.
LLDY was a drinks manufacturing company which also operated a distillery and bonded warehouse. In 2011 it lost its second largest customer, resulting in a substantial reduction in its profits.
After the bargaining unit rejected a pay offer in the early part of 2012, the company’s managing director threatened the union, saying that, if the offer was rejected again (which it was), he would subcontract the work done by the unit. In June 2012, the company announced its decision to outsource its spirit-handling activities to another company. As the transfer was governed by TUPE, it wrote to the employees affected by the transfer on the same day, confirming that the transfer would take place on 2 July. In the event, it was postponed to 9 July after a meeting with the union on 4 July.
The union lodged a complaint that the company had breached regulation 13(2) of TUPE in that it had failed to inform the workforce of the real reasons for the transfer (the pay dispute and the managing director’s threat); and by writing so soon before the transfer was due to take effect, the company had not allowed enough time to enable proper consultation.
Regulation 13(2) of TUPE requires employers “long enough before a relevant transfer" to consult the “appropriate representatives” of employees affected by the transfer by informing those representatives that the transfer is to take place, the date of the transfer and the reasons for it, among other things.
The tribunal found, as a matter of fact, that the refusal to accept the company’s pay offer was one of the reasons for the outsourcing. It also found that the company had not consulted “long enough” before the transfer, particularly given the fact that the meeting with the union took place just 48 hours before the company closed down for the weekend. The transfer took place the following Monday.
The tribunal concluded that the union was therefore entitled to a declaration that the company had breached the duty to inform and consult as it had failed to provide all the reasons for the transfer and that, in relation to the information provided, this was not long enough before the transfer to enable meaningful consultation to take place.
The EAT held that the tribunal had to ask whether, in all the circumstances of the case, the information was provided long enough before the transfer. That did not mean a duty to provide the information as soon as the decision was made, but a duty to provide information in time to allow consultation with representatives. In this case, the tribunal was entitled to answer the question in the negative.
The tribunal also found, as a matter of fact, that the dispute about the pay rise and the threat made by the managing director were among the reasons for the decision to outsource. As the company had not referred to either of these issues in its letter to the union, the tribunal was entitled to take the view that it was in breach of its obligations under TUPE as it had failed to provide all the reasons for the transfer as required under regulation 13(2).
This case is significant because it directs tribunals to engage with the particular facts of a case when considering whether or not the duty to inform and consult has been discharged. The EAT found that the tribunal was correct to examine the facts and decide the true reasons for a transfer before asking whether it was possible to reconcile these reasons with the reasons given to the transferring employees in advance of the transfer. Where there is a discrepancy between the stated reason and the “true” reason, the employer will not have discharged their duty.
The decision gives teeth to the right to be informed and consulted and creates a requirement for the consultation to be both meaningful and genuine. Had the Appeal Tribunal found that this approach was wrong, the effect would have been to reduce the duty to inform and consult to a mere tick-box exercise.