In this update on recent cases dealing with issues arising under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), we report on an EAT decision on what amounts to "measures", requiring information and consultation of employees and a decision that a temporary cessation of activities did not prevent a TUPE transfer.
Changes to pay arrangements are "measures"
In a rare decision on "measures", the EAT has held that changes to pay arrangements following a TUPE transfer constituted measures for the purposes of Regulation 13 of TUPE and that, consequently, the transferor was under an obligation to inform and consult with representatives of the affected employees on those changes. This was notwithstanding that the changes were administrative and fairly minor in nature (Todd v Strain).
Ms Todd was the owner of a care home, which transferred to Care Concern in January 2008 giving rise to a relevant transfer under TUPE. Ms Todd called a staff meeting, without notice, in November 2009 to inform the employees that an offer had been made for the care home that could not be refused but that all their jobs were safe. Less than a third of the workforce attended this meeting and no more detailed information was provided. No representatives were elected and no consultation was carried out with staff in the run up to the transfer. 32 employees subsequently complained to the tribunal on the grounds that Ms Todd and Care Concern had failed to comply with their obligations to inform and consult and to elect employee representatives under TUPE.
The tribunal identified three measures that Miss Todd had envisaged taking in relation to the transferring staff, which had not been communicated to employees or to representatives. These related to transitional pay arrangements for the period around the transfer and included a change to the normal payment date and an extra holiday payment. The EAT held that the changes constituted "measures" under TUPE on the basis that, although the measures were administrative and of a kind usually necessary in the context of a transfer, they were not an inevitable consequence of it. There is no requirement under TUPE that a measure must disadvantage an affected employee before the obligation to consult is triggered.
The EAT considered that the purpose of the duty to consult must be to enable such transitional arrangements to be explained to employees and for them to be reassured (if appropriate) that they will not be disadvantaged. Although the sums involved were small, of relevance here was the fact that many of the claimants were low paid and that the changes had caused worry amongst them.
The EAT overturned the tribunal's decision to award the maximum level of compensation (13 weeks' pay per affected employee) and, taking account of the fact that Ms Todd had provided some (albeit limited) information and the nature of the changes, reduced the award to 7 weeks' pay per employee. The EAT also held that Care Concern was jointly liable to pay the compensation.
Impact on employers
- Employers should take this as a warning of the potential consequences of failing to inform and consult properly on a transfer. If there is any doubt about whether a proposed change amounts to a "measure", employers should provide information and consult about any consequences.
- It is important to bear in mind the obligation to elect representatives, if none are already appointed, with whom the informing and consulting process should be carried out and this is something that will need to be factored into any transfer timetable.
TUPE transfer during temporary closure
The EAT has held, in Wood v London Colney Parish Council, that a TUPE transfer had taken place during the temporary closure of a bar.
The Claimant was a bar steward employed by a social club and was the sole employee and licensee of the bar. The bar was closed and the bar steward's employment was terminated by the club when they lost their premises licence and handed back the lease of the property to the Parish Council. Later in the same month, the Parish Council set up a new management committee and applied for a licence to re-open the bar. The bar was re-opened the following month under a personal licence, with a premises licence being granted thereafter.
The EAT confirmed the position of existing case law, applying the well-known guidelines in Cheeseman v Brewer. It held that, as this closure was only a temporary cessation of the business, the economic activity retained its identity. This was because, at the time of the transfer, the Parish Council intended that the bar would be re-opened. The fact that there was no premises licence in place at the time of the transfer did not prevent there being a relevant transfer. The bar steward's employment had transferred under TUPE and he was able to proceed with his unfair dismissal claim against the Parish Council.
Impact on employers
- In circumstances where business activities cease around the time of a sale, it will be important, in determining whether TUPE will apply to the transaction, to consider the reason for the cessation and whether the transferee intends to continue or resume the activity at a later date.