News

15.12.2009
Case Round Up

Cathrine Grubb reports on recent notable cases.

1. Two recent cases have considered important questions regarding the scope and nature of the statutory obligation on employers to inform and consult appropriate representatives under regulation 13 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’). Royal Mail Group v Communication Workers Union [2009] EWCA Civ 1045 considers whether the information given to representatives has to be objectively accurate or whether it is enough for the employer to hold a genuine belief in its accuracy. The second case of Cable Realisations v GMB Northern was handed down by the EAT on 29th October 2009. In this case the question arose whether it was a breach of regulation 13(2) to fail to provide the relevant information in sufficient time for a meaningful consultation, even if a consultation was not rendered mandatory by virtue of regulation 13(6). 
    
2. If a party breaches regulation 13 the employment tribunal may award “appropriate compensation” in accordance with regulation 15(8) for each affected employee. This currently stands as up to 13 weeks pay for each effected employee by virtue of regulation 16(3). The definition of “affected employee” is very wide and goes beyond the employees transferred under TUPE. A breach is therefore potentially expensive. 
    
3. Thirteen weeks pay is the maximum award for any breach of regulation 13. In Cable Resolutions the Employment tribunal had reasoned that the remedy available under regulation 16(3) was for both failure to consult and inform and so that a maximum for a failure to inform is three weeks pay. The EAT properly found that a maximum of thirteen weeks pay was available, but upheld the award because it was appropriate to the circumstances of the case for different reasons.

1. This case concerned the transfer by Royal Mail of some of its post offices to WH Smith. Royal Mail was of the view that their contractual arrangements with their employees meant that no automatic transfer would take place under regulation 4. This is the information it gave to its employees in accordance with regulation 13(2)(b). In this respect, Royal Mail Group was quite wrong (as can easily happen when seeking to interpret TUPE). The issue therefore arose whether the test for determining whether a party had complied with regulation 13 was subjective or objective. That is to say, whether it is sufficient for the transferor to provide incorrect information provided he holds a genuine belief that the information is true or whether the information actually has to be correct.
    
2. On behalf of the Commercial Workers Union it was submitted that the obligation to provide information was mandatory and provided no exception for the employer’s mistaken belief. It stressed the importance of the employee being able to choose for whom s/he worked. The purpose of TUPE was to safeguard the interest of employees and so the obligation under regulation 13 should be interpreted to require the employer to guarantee the accuracy of the information given. References were also made to the mandatory wording of sub paragraphs 13(2)(a) and (b) in contrast to the subjective wording of sub paragraphs (c) and (d) in further support of this interpretation. 
    
3. The Court of Appeal found however that the language of regulation 13 was not the language of strict liability and favoured a subjective test in relation to the matter. Whilst there was an obligation on employers to properly consider the legal implications of a transfer, legal implications were a difficult thing to be certain about. It would therefore be unreasonable to require employers to guarantee their accuracy. 
    
4. This was a case however where Royal Mail had consulted solicitors before supplying the information. It seems likely that an employer who has not taken steps to properly consider the correct legal position will be found to have breached regulation 13.

1. This case concerned a transfer that took place on 3rd September 2007. The transferor had been making a loss and so took the decison in May 2007 to discontinue its cable business in 2007 through either sale or closure. GMB Northern (‘the Union’) was provided with the information in compliance with regulation 13(2) of TUPE on 15th August 2007. On 17th August the factory closed until 1st September for its annual shutdown. The transfer involved no measures in relation to the transferring of employees and so there was no mandatory obligation to consult under regulation 13(6). 
    
2. The argument was advanced on behalf of Cable Realisations (‘the Appellant’) that the obligation under regulation 13(2) only arises with a view to compulsory consultation provided for in regulation 13(6), not voluntary consultation. Consequently, as there had been no breach of regulation 13(6) there could be no breach of regulation 13(2) purely by reason of the time when the information was supplied.
    
3. The EAT comprehensively rejected this argument. It rejected the Appellant’s contention that the purpose of regulation 13 was to put at rest the minds of the affected employees. The EAT found that the true purpose of regulation 13 was to “allow representatives of those employees to engage in a consultation process with the employer on an informal basis. Whether the employer is obliged to engage in such a consultation exercise is dependant on regulation 13(6).” It follows that there is always an obligation to provide information promptly so as to allow for meaningful consultations to take place, even if the obligation to consult does not arise.
    
4. It was also argued on behalf of the Appellant that the annual shutdown was immaterial to whether there had been a breach of regulation 13(2). This was also rejected by the EAT. That most of the workers were on holiday as a result of the shutdown meant that the representatives could not effectively communicate with those they represented. The shutdown therefore precluded meaningful consultation as a matter of fact and was thus relevant when considering whether regulation 13(2) had been breached.
    
5. This case emphasises the importance of parties informing representatives promptly so as to allow for the possibility of meaningful consultations to take place. It makes plain however that a maximum award is only likely to be granted in cases where there had been a complete failure to inform and consult. 

 

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