TUPE - the duty to inform and consult
In the present uncertain economic climate, it is useful to bear in mind how much information employers have give their workforce about what is going…
In the present uncertain economic climate when businesses may be considering significant reorganisation, it is useful to bear in mind how much information employers have give their workforce about what is going on. This article looks at employers’ duties once the decision has been taken to pass any or all of the business to a new owner.
When an ‘economic entity’ is sold on, it is likely that the Transfer of Undertakings (Protection of Employees) Regulations (TUPE) apply. The outgoing employer (the transferor) and the new owner (the transferee) both have a duty to inform and consult with the affected employees about the change.
What information is required?
The employees must be given 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” that the transferee will be taking. There are no example of “legal, economic and social implications” in the Regulations but it would be reasonable to inform about the automatic transfer of contract unless the employee objects, rights of continuity of employment and continuing terms of contract. If the transfer is likely to mean a move of location, redundancies or any other major changes then these should be made clear at the outset. The transferor may not be aware of what the transferee has in mind until quite late in the process as the transferee is not obliged to send a ‘measures statement’ until 14 days before the transfer. However, discussions between the parties should seek to clarify as soon as possible those changes which are definitely going to take place, for instance, a change of holiday year or payroll date. All proposals, however trivial should be notified to the employees and if there are to be no changes, then that too must be notified.
Who must be informed?
The Regulations stipulate that this information must be given to all “affected employees”. This is clearly wider than just those who will transfer – it will cover remaining employees if work patterns, job descriptions or any other matters change because of the transfer.
When should the information and consultation take place?
There is no fixed timescale in the TUPE Regulations for consultation only that the information must be given “long enough before the transfer for consultation to take place”. Meaningful consultation requires time for those taking part to understand, consider and then raise any issues with the employer. There also needs to be time for the transferring employees to elect a representative if they so wish. Both the transferor and the transferee should plan enough time to allow this process to be properly completed prior to the transfer. The duty to inform and consult is a continuing duty so any further information obtained from the transferee must be given to the employees. The transferor and transferee are jointly and severally liable for this duty. If there is a failure then the employees have valid claims against both parties. The starting point for any awards is 13 weeks pay per individual. This award is reduced when there has been some attempt to inform and consult.
How is the information to be given?
It is clear that if representatives have been elected that all information must be in writing and delivered or posted to the representative. If there are no representatives and the consultation is on an individual basis, then it is enough to give the information orally. However, it is always better to give every transferring employee the basic information in writing if only to ensure full understanding.