When an ‘economic entity’ is sold on, it is probable that the Transfer of Undertakings (Protection of Employees) Regulations (TUPE) 2006 will apply. When TUPE applies the duty to inform and consult will be triggered, ignore this TUPE consultation process at your peril.
In a recent case, an employer through no fault of its own, rushed a TUPE consultation to make a commercial deadline and as a result did not go through the often thought ‘technical’ requirement to either consult with trade union representatives or elect representatives from amongst the workforce as part of that consultation process. The tribunal decided that the employer should pay the maximum award, 13 weeks gross pay per individual. As there were multiple claimants, the employer was exposed to many thousand pounds of loss.
In our view that award was excessive as the starting point for such an award is 13 weeks and there was some consultation albeit rushed. It was therefore wrong to start at the top of the scale. We use the term ‘through no fault of its own’ because the employer concerned took advice from a firm of solicitors who may have given incorrect advice on some elements of the TUPE consultation process. The case is to be appealed but of course that takes time and money and so the lesson here is to get things right from the start. Get it right, and there is less likely to be a claim. Wirehouse have considerable experience and expertise in this area.
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TUPE Consultation – Information to be Given
The transferor must provide information about “the fact that the transfer is taking place, the date of the proposed transfer and the reason for it, the “legal, economic and social implications…” and “any envisaged measures”, including any measures that the transferee or transferor envisage taking and more recently information about agency workers.
In order for the transferor to comply with its obligation to inform, the transferee must provide the transferor with information about any measures it envisages taking in relation to the transferring employees post transfer. The provision of this information must be given “long enough before the transfer for consultation to take place”.
Who Must be Informed
The Regulations provide that information must be given to the “employee representatives”. This is normally the recognised trade union or an existing employee body who have authority to act on behalf of the employees in a TUPE transfer. In the absence of a recognised trade union or existing employee body, the transferor will need to arrange for employee representatives to be elected specifically for this purpose. There are detailed regulations (Reg 14) concerning the election of employee representatives for these purposes, and their functions and responsibilities. It is this element that employers often think they can ignore with impunity. They cannot. The case above proves the point.
There is one exception. Employers with fewer than 10 employees can inform and consult affected employees directly, where there are no existing appropriate representatives, and the employer has not invited any of the affected employees to elect employee representatives.
Duty to Consult
The duty to consult is only triggered if a transferor or a transferee envisages taking measures in respect of their own employees under regulation 13 (6) but it’s important to allow for ‘voluntary consultation’ so that those elected to represent the workforce understand the situation fully so that they can judge for themselves whether there are any measures which should be consulted on. There should always therefore be consultation.
As soon as a transfer seems likely, both the transferor and the transferee should allow for enough time to enable representatives to be elected and for full TUPE consultation to take place. A failure to do so can result in a large award, designed to be punitive. In other words, the more a tribunal think that the TUPE Regulations have been ignored, the higher the cost for your business.
For practical advice and guidance about your TUPE consultation process contact our legally qualified team of HR Consultants.