Siobhan Murphy
Posted on 20 Jul 2021

The obligation to inform and consult - what does a Transferor have to do?

Where an entity is transferred and the Transfer of Undertakings (Protection of Employees) Regulations ("TUPE") apply, the current employer (the "Transferor") must comply with certain requirements prior to, and during, the transfer process.

It is not always clear to employers when they are obliged to inform and/or consult. However, in the event of non-compliance, an affected employee may be entitled to claim for a "protective award" in the Employment Tribunal ("ET"). An ET is permitted to award compensation equivalent to a maximum of 13 weeks' gross uncapped pay per affected employee. Crucially, this type of claim cannot be waived under a settlement agreement.

Who must be informed and/or consulted?

Regulation 13 of TUPE details the duty to inform and consult with the "appropriate representatives" of any "affected" employees. TUPE defines "affected employees" as "any employees of the transferor or the transferee (whether or not assigned to the organised grouping of resources or employees that is the subject of a relevant transfer) who may be affected by measures taken in connection with it." The "appropriate representatives" will be the applicable trade union representative(s), or, where there is no recognised trade union,  employee representatives who are  appointed or elected by the affected employees.

The duty to inform

Once the appropriate representatives of the affected employees are identified, the Transferor needs to consider its duty to inform. Regulation 13(2) of TUPE requires that the Transferor provides information about:

  1. the fact that the transfer is taking place, the date of the proposed transfer and the reason for it;
  2. the legal, economic and social implications; and
  3. any measures that the Transferor envisages taking in connection with the transfer and the measures, in connection with the transfer, which the Transferor envisages the Transferee will take.

It is therefore clear that the obligation to inform applies to both the envisaged measures of the Transferor and the Transferee. The Transferor may still be unaware of the Transferee's intentions until 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. Where it is envisaged that the Transferee will take no measures, the representatives must be informed of that fact.

The duty to consult

Regulation 13(6) of TUPE sets out the Transferor's duty to consult. This is more limited than the duty to inform, in that consultation by the Transferor is only required in relation to measures that the Transferor envisages making. Effectively, this means that the duty only arises where the Transferor has formulated a definitive plan or proposal which it has it in mind to implement. The Transferee is similarly only obliged to consult regarding the measures that it envisages taking in relation to its own employees.

Non-Compliance

Failure to appropriately inform and consult does not render the transfer itself void. However, affected employees will be entitled to claim a "protective award". Should a successful claim be brought against either the Transferor or Transferee as appropriate, compensation may be awarded in such amount as the Tribunal considers just and equitable having regard to the seriousness of the failure of the employer to comply with its duty, up to a maximum of 13 weeks' gross uncapped pay per affected employee.

Compensation may be ordered against the Transferor, the Transferee, or both. Where any such an award is made against the Transferor, the Transferee may be jointly and severally liable in respect of the compensation payable under Regulation 15 of TUPE.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact Siobhan Murphy to discuss any issues you are facing.