Is a transferee’s name part of the duty to inform and can a settlement with the transferee affect an award being made against it for not providing measures information? This article explains a recent case and how it applies for businesses going through TUPE.
The law on TUPE
In a Transfer of Undertakings (Protection of Employment) (TUPE) situation, an employer has an obligation to provide the following information to the appropriate representatives of its affected employees:
- The fact that a transfer is to take place, the date of the transfer and the reasons for it
- The legal, economic and social implications of the transfer for any affected employees
- The measures, in connection with the transfer, that it envisages it will take in relation to any of the affected employees (or confirmation that it does not envisage taking any such measures)
- If the employer is the transferor, the measures, in connection with the transfer, which it envisages the transferee will take in relation to any affected employees who will become employees of the transferee by virtue of TUPE (or confirmation that it envisages that no measures will be so taken) and
- Suitable information as to the use of agency workers
The fact that a transfer is to take place, the date of the transfer and the reasons for it;
The legal, economic and social implications of the transfer for any affected employees;
The measures, in connection with the transfer, that it envisages it will take in relation to any of the affected employees (or confirmation that it does not envisage taking any such measures;
If the employer is the transferor, the measures, in connection with the transfer which it expects the transferee will take in relation to any affected employees who will become employees of the transferee by virtue of TUPE (or confirmation that it intends that no measures will be so taken); and
To enable a transferor to comply with point 4 above, the transferee must provide it with information on the measures it intends, taking in advance to allow the transferor to communicate this in good time for the transfer.
If an employee feels they have a claim for a failure to inform, they must pursue this against their employer. If the reason for the failure is because the transferee did not provide the employer with measures information, the tribunal can order the transferee to pay compensation instead.
If a claim for failure to inform is successful, the Tribunal can make an award of up to 13 weeks gross pay (per employee). The Tribunal has a wide discretion as it is recognised that failures can range from minor technical breaches to complete failures. The Tribunal can reduce the award to zero if appropriate given the nature of the breach.
Clark v Middleton & Anor
This recent case of the Employment Appeal Tribunal (EAT) raised two very interesting points in relation to the duty to inform.
The Claimant’s employment transferred under TUPE to a company called Black Dog Hydrotherapy (BDHL) on 30 September 2019. BDHL was a newly formed company incorporated on 19 September 2019.
The Claimant had been told that she was transferring to a newly formed company and given details of the proprietor of the company but, due to the late timing of the incorporation, was not given the name of the new company.
BDHL did not provide measures information in relation to the transfer as it should have done which, meant that the transferor was unable to supply the measures information to the Claimant.
The Claimant brought a claim against her employer that it had failed to comply with its obligations to inform. The Claimant also pursued wages, holiday pay and unfair dismissal claims against BDHL but subsequently settled ‘all claims’ against BDHL prior to the hearing.
Can a settlement with the transferee affect an award of compensation being made against it for failing to provide measures information?
The Claimant alleged that her employer had not informed the Claimant of BDHL’s post-transfer measures. This claim was successful. However, the employer was able to show that this was due to BDHL not providing it with measures information and, as such, any order for compensation should be made against BDHL.
The issue before the EAT was whether an order for compensation could be made against BDHL or whether this had been settled by the Claimant.
The Claimant argued that she had only intended to settle the claims she had brought against BDHL specifically (unfair dismissal, wages and holiday pay). Further, that the failure to inform claim was a claim against the transferor only and so could not be settled with BDHL, as transferee (notwithstanding that BDHL could be liable for the award).
However, the EAT disagreed. It felt that it should be open to parties to be able to settle such claims (not withstanding that there is no ‘freestanding’ claim against the transferee) and concluded that the settlement wording in this case was broad enough to cover this type of situation. In particular, the settlement had referred to ‘all claims’ under the relevant claim number and did not specifically carve out an award for compensation like this.
Does the transferor need to provide the name of the transferee? If so, how serious is this breach?
The Claimant also claimed that she should have been told the name of her new employer. The EAT agreed that this should have been provided. The EAT said that it was curious why TUPE did not specifically make clear that the identity of the transferee needed to be provided but said that this was ‘part and parcel’ of the duty to inform employees of the fact that the transfer is to take place.
In terms of seriousness, the original Employment Tribunal had viewed this as a ‘very technical’ breach only and reduced compensation to zero. However, the EAT disagreed. It said that knowing precisely who your employer is, is of fundamental importance to the employee. As such, the breach was more than a mere technicality and the matter was referred for a fresh assessment on compensation.
Conclusion
In most cases, providing the name of the transferee will not be an issue. However, this case makes clear that the name of the employer is important and, once known, should be communicated as part of the transferor’s duty to inform.
Further, it confirms the position that whilst claims for failure to inform must be made against the relevant employer, it is possible for the transferee to settle its involvement in such claims.