To consult or not to consult

Case update: Todd v Strain and others (1) Care Concern GB Ltd (2) Dillon and others (3) EAT 16/06/2010

Many companies are familiar with the consultation provisions in regulation 13 of TUPE 2006. Broadly, these impose an obligation on employers to inform and consult with employee representatives prior to a TUPE transfer.

T was the owner of a care home, which was transferred to CC in January 2008. In November 2007, T had called a meeting, without notice, to inform staff that an offer had been made for the home that could not be refused, but that everyone’s job was safe. No detailed information was given at the meeting, which only about a third of staff attended. Employees complained to a tribunal that T failed to inform and consult under TUPE 2006.

The tribunal upheld the employees’ complaint, after identifying measures that T intended to take regarding pay for work done in the days up to the date of transfer, including a change to the normal payment date. The tribunal took the view that the failure to inform and consult about these measures was a serious one and accordingly awarded each employee 13 weeks’ pay - the maximum compensation available.

T appealed against the tribunal’s decision. The EAT upheld the tribunal’s finding that T had failed to inform and consult, holding that the payment arrangements constituted ‘measures’ under TUPE 2006. Although the arrangements were administrative and of a kind usually necessary in the context of a transfer, they were not an inevitable consequence of the transfer and represented a departure from what would otherwise have occurred. The EAT considered that the purpose of consulting must be to explain such transitional arrangements to employees, and to reassure them that they will not be prejudiced in any way. Although the sums involved were small, many of the claimants were low paid, and the effect of the measures caused the employees to worry.

The EAT did, however, overturn the tribunal’s decision to award the claimants 13 weeks’ pay, and substituted an order for seven weeks’ pay. Although there was a complete failure to observe regulation 13, this was not a case where no information had been given to the workforce.

The case is important for the following reasons:

  • it highlights the fact that the purpose of TUPE 2006 is to protect and safeguard the rights of employees.
  • the EAT’s decision distinguishes between administrative changes which are the inevitable consequence of a transfer - which do not trigger the consultation obligations under TUPE 2006 - and changes which represent a departure from what would normally have occurred, about which the employer must inform and consult. In the majority of cases, this distinction will be a fine one and best advice would be to err on the side of caution and consult.
  • in some cases, employers will decide not to undertake full consultation under regulation 13. In this case, the EAT reduced the award made by the tribunal on the basis that some information had been given to the workforce. This clearly demonstrates that, when it comes to consultation under TUPE 2006, something is always better than nothing. 

For more information, contact Kerrie Hunt or Jeremy Nixon.

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