TUPE and failure to inform and consult


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The Employment Appeal Tribunal (EAT) has held in Clark v Middleton and anor that, although an employment tribunal was correct to find that, in a claim for a failure to inform and consult under TUPE, no award could be made against the transferee due to the settlement of earlier claims, the making of a zero award in relation to the transferor was incorrect.

The claimant worked for a business providing hydrotherapy treatment for dogs, which was run by M, a sole trader.  The business was transferred to BDH Ltd on 30 September 2019 (a company incorporated a couple of weeks' earlier, and which was set up by another of M's employees) and the claimant's employment transferred.  Following a breakdown in relations the claimant resigned and brought an employment tribunal claim against M seeking 13 weeks' gross pay for failing to inform and consult under Regulation 13 of TUPE.  This was accompanied by claims against BDH Ltd for unpaid wages, holiday pay and unfair dismissal.  The latter claims were settled via Acas and dismissed upon withdrawal.  The claimant continued with her claim against M, with M arguing that any failure was a result of BDH's failure to properly notify her about any measures envisaged and so therefore BDH was liable.

The tribunal found that the details of the transfer were agreed very late in the day and there was no written communication to staff of the final details before the transfer took place.  They were only sent letters and new contracts of employment on 21 October 2019 informing them that BDH Ltd was the new employer.  The tribunal concluded that it was not reasonably practicable for M to have known about the envisaged changes as they had been kept from her, and so there had only been a "very technical breach" of Regulations 13 in that M had failed to inform employees that the transfer was going to be to BDH Ltd (rather than to the individual who set up BDH Ltd).  The tribunal exercised its discretion to award zero compensation.

On appeal, the EAT held that the claimant's withdrawal email to the tribunal in respect of her claims against BDH Ltd made it clear that they were being withdrawn, and did not state that it was referring only to specific claims.  This conveyed the sense that the claimant was drawing a line under BDH Ltd's entire involvement in the proceedings.  However, the EAT also held that the tribunal had erred in making a zero award in respect of M's failure to notify the claimant of the identity of the transferee.  Here it was known that the new employer was likely to be a newly-formed company, as well as who its proprietor would be, but it still mattered to know the name and identity of the legal person who would be the employer.  It was not a mere technicality and the EAT remitted the matter to a fresh tribunal to consider the appropriate award.

Take note:  The decision in Clark shows the importance of providing information to those transferring to a new employer under TUPE.  In this instance the fact that the transferee company was only incorporated shortly prior to the transfer did not mean that information about it could not be passed on to the employees transferring.  Although a failure to inform and consult will not always carry the full 13 week gross pay award (it will be such sum as the tribunal considers "just and equitable" taking into account the seriousness of the employer's failure to comply with its duty) it may still result in a significant liability.

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