TUPE: the duty to inform and consult
This article looks at employers’ duties once the decision has been taken to pass any or all of the business to a new owner.
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 to 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) will apply. When TUPE applies the duty to inform and (potentially) consult will be triggered.
If a successful claim is made in the event of a breach, the starting point for any award is 13 weeks gross pay per individual.
In view of the potentially significant penalties for non-compliance, it is important the outgoing employer (the transferor) and the new owner (the transferee) comply with their respective obligations.
What information must 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 envisages taking (see below).
There are no examples of “legal, economic and social implications” in the Regulations but it would be reasonable to include information about the automatic transfer of the contract unless the employee objects, rights of continuity of employment and continuing terms of the 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.
In order that the transferor is able 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 transferor may still not be aware of what the transferee has in mind until quite late in the process. 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 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.
When should the information be provided?
There is no fixed timescale in the TUPE Regulations for the provision of the information only that it must be given “long enough before the transfer for consultation to take place”.
Duty to consult?
The duty to consult is only technically triggered if a transferor or a transferee envisages taking measures in respect of their own employees. However, there is authority that states that ‘voluntary consultation’ should always be undertaken.
Accordingly, we would always recommend, as a matter of best practice, that consultation should take place. This will enable those taking part to understand and consider any proposals and then raise any issues with the employer.
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 as the transfer progresses.
For further support or guidance on any aspect of employment law, contact our employment law solicitors.