Confirmation that employees cannot claim directly against a transferee for failure to inform and consult

In the case of Mr G Allen and Others v Morrisons Faciliities Services Ltd,the EAT was asked to consider whether employees could bring a claim directly against a new employer to whom their employment had transferred under TUPE, in connection with a failure to inform and consult.

The EAT concluded that they could not.

It is well known that the transferee employer is obliged to provide the transferor with information relating to "measures" it proposes to take in relation to the employees, as part of the consultation process. It is also well known that a transferee can also be jointly and severally liable for a transferor's failure to inform and consult.

But what happens when the transferee is the party at fault?  This case is a useful reminder that the claim must be brought against the transferor, even where the allegations relate to a transferee's failure to provide measures information. The transferor can then bring the transferee into proceedings, claiming that any failure to comply with the duty to inform and consult arose out of the transferee's failure to provide measures information.  The tribunal may then order the transferee to pay compensation if it determines this to be appropriate.

Transfers occurring before 31st January 2014 - relocation is not an ETO

Those familiar with TUPE will be aware that a dismissal in connection with the transfer will be automatically unfair unless it is for 'an economic, technical or organisational reason entailing changes in the workforce'.  The narrow interpretation given by the courts to the term "changes in the workforce" had given rise to difficulties in practice, as it had been held to require changes in numbers or functions of staff and so precluded relocations where neither of those would arise.

A change made by the amendments to TUPE in January this year confirmed that "changes in the workforce" now includes a situation where employees are dismissed in connection with a relocation which does not otherwise involve any reduction in employee numbers.

The EAT has confirmed this month in NSL Ltd v Mr P Besagni & Others that this was not the case before the introduction of the amendments to TUPE on 31st January 2014. Therefore, when the London Borough of Barnet outsourced some of its parking operations and the claimants declined to move from Barnet to Croydon and Lancing following a relocation of those services by the new employer, their subsequent dismissals were automatically unfair. The precise date of transfer will therefore be key to identifying the employer's scope for location change.

Employees transferred to parent company following share purchase of subsidiary

In an unusual decision, the EAT has confirmed that a transaction which was structured as a share purchase, to which TUPE would not apply, could nevertheless give rise to a TUPE transfer as a result of the  subsequent actions of the new owner of the Company.

Following the share purchase, the new owner replaced the Board of the employer company with its own nominees, told employees they would be embarking on a period of integration into the new owners business and brought in an integration team overseen by a consultant who reported directly to the parent company CEO. The court found that the reality was that the operation of the business in which the staff were employed, and all decision making relating to it, had transferred to the parent company and this was sufficient to give rise to a transfer of all employment contracts under TUPE.

Where employers wish to retain employees within companies they have acquired, this case suggests that a level of care and planning will be necessary to ensure that a TUPE transfer is not thereby triggered where this is not intended. There remain difficulties in altering terms and conditions of employment in the context of a TUPE transfer and most employers will therefore wish to avoid triggering such transfers where appropriate communication and management structures can be put in place to ensure that employees clearly continue in the employment of the acquired subsidiary.

"Grace period" to check work permits increases from 28 days to 60 days

The Home Office has published a revised code of practice on preventing illegal working. The new code of practice will apply where the person was employed on or after 29 February 2008 and the breach occurred on or after 16 May 2014, the date on which the new code was published

An employer is required to carry out its own checks where employees are inherited following a TUPEtransfer.  At present the new employer has a "grace period" of 28 days following transfer in which to do this. 
This code to 60 days following the transfer, the period during which the new employer should carry out the document checks which will enable it to avail of the so called "statutory defence" in the event that any person employed did not in fact have the right to work in the UK. The statutory defence to a charge of employing workers illegally can be claimed where an employer is able to show that it checked and retained copies of prescribed documents verifying both the identity and the right to work in the UK of each person employed.