Section 11 obligation
Labour & European Law Review Weekly Issue 521 24 May 2017
Section 1 ERA requires employers to give their employees details of their conditions of employment on starting work. In Born London Ltd v Spire Production Services Ltd, the Employment Appeal Tribunal (EAT) held that as employers did not have to state whether the information set out in section 1 was contractual or not, they did not have to state whether employee liability information under section 11 of TUPE was contractual or not.
Just before Born took over a printing contract from Spire involving the transfer of 32 employees, Spire provided Born with employee liability information, including particulars of their employment as required under regulation 11(2)(b) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.
The company listed employees’ terms as “contractual” or “non-contractual”. Under the heading “non-contractual”, it stated that each employee was entitled to a Christmas bonus of one week’s pay, plus £7.50 per year of service, payable each November. After the transfer, four employees produced a statutory statement of their particulars of employment, which did not say that the bonus was non-contractual while others had statements stating that it was. In any event, it transpired that all 32 employees had been paid a bonus for each year they had worked for Spire.
Born lodged a tribunal claim for compensation on the basis that Spire had not complied with regulation 11(2)(b) TUPE.
The tribunal dismissed the claim on the basis that it had no reasonable prospect of success. Even assuming the bonus was contractual, it held that regulation 11 simply required Spire to provide particulars as specified in section 1 of the Employment Rights Act 1996 (ERA). This did not require companies to state whether or not remuneration was contractual. Nor could EU law help Born.
Although this was an “unattractive conclusion”, not least because it seemed that at least some of the information volunteered by Spire as to whether the bonus had contractual force was untrue, the tribunal concluded that if there was a remedy open to Born, it “must lie elsewhere”.
The EAT agreed with the tribunal that the employment particulars that employers had to provide under section 1 ERA were not limited to contractual terms and conditions and nor was there any obligation on employers to state whether the matters to be set out were contractual or not. Although section 1 ERA requires employers to provide details of “the method of calculating remuneration”, it did not require them to specify whether remuneration was contractual or not.
It also agreed with the tribunal that the EU directives relied on by Born did not help them, not least because Council Directive 91/533/EU (setting out the employer's obligation to inform employees of the conditions applicable to the contract or employment relationship) made no distinction between a “contract” and an “employment relationship”. Likewise, Council Directive 2001/23/EC (the Acquired Rights Directive) adopted a very general approach, using the terminology of rights and obligations.
Even on the assumption that Spire had wrongly volunteered that the Christmas bonus payment was “non-contractual”, that was information supplied in addition to the particulars it was required to provide for regulation 11 purposes. As it was not part of the employee liability information for those purposes, Spire had not breached its section 11 duty.