Shepherd and Wedderburn has acted for City Building (Glasgow) LLP, one of Scotland’s largest construction companies, in a successful appeal to the Employment Appeal Tribunal (EAT).
The landmark case, which was brought against City Building and Glasgow City Council by three unions on behalf of over 1,500 employees, concerned an alleged failure to inform and consult employees under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).
TUPE is designed to protect employees when a business transfer takes place; this can include the sale or purchase of a business or the outsourcing of a function or activity .
The case looked at whether City Building (Glasgow) LLP, to which Glasgow City Council outsourced its building services function, was required to consult with union representatives of the employees who transferred from the Council after the transfer had taken place, in relation to any transfer-related measures City Building may have envisaged taking in relation to them.
EAT Judge, Lady Smith, ruling in City Building's favour, held that transferee employers were under no obligation to do so.
This was a previously untested point of law and, if the EAT had not ruled in City Building’s favour, there was a concern that the consequences for all UK employers involved in future transfers could be far reaching. Many such transfers might have been slowed, stifled or even halted altogether. This is because, if the unions' propositions had been accepted, there would be a requirement to consult over changes which needed to be put in place on day one after the staff handover. These might include, for example, a relocation of the transferring employees to a new site. As you cannot meaningfully consult after the fact, changes like these, which may in practice be necessary to achieve the transfer, would be stalled. With the market in its current state, any further obstacles to business deals could have been a significant blow.