The Labour Court has reaffirmed the position that where an employer, as a transferor, fails to inform and consult with its transferring employees, as required under Regulation 8 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (the “TUPE Regulations”), liability for such failure passes to the transferee.  Any remedy available to an employee under the TUPE Regulations for their former employer’s failure to comply with its obligations under the TUPE Regulations can, therefore, only be sought as against their new employer, the transferee.  There is no provision for joint and several liability under the Irish TUPE Regulations.

Background

The Labour Court considered the issue in three related cases before it, Elizabeth Collins v J Donohue Beverages Limited (TU/17/25), Charlene Murphy v J Donohue Beverages Limited (TU/17/26) and Kinga Puszka v v J Donohue Beverages Limited (TU/17/27) which were heard together by way of an appeal of a decision of an Adjudication Officer.  It was accepted in each case that a transfer of undertakings within the meaning of the TUPE Regulations occurred on 4 November 2015, the effect of which transferred the complainants’ employment with a beverages company (which was placed in receivership on the date of transfer), to the transferee by operation of law.  It was not in dispute that the employer had not consulted with the transferring employees.  The Labour Court examined the issue of jurisdiction to hear the claims against the transferor only; it did not consider it necessary to determine the complainants’ substantive complaints that their former employer, had failed in its obligations to engage in a 30-day information and consultation with the employees in advance of the transfer date.

Where the TUPE Regulations apply, the transferor’s rights and obligations arising from a contract of employment existing on the date of transfer, transfer by operation of law to the transferee. The Labour Court accepted that the TUPE Regulations imply a term into the contract of employment of a transferring employee that entitles the employee to a period of information and consultation through his / her chosen or elected representatives in advance of the TUPE transfer.  The Labour Court accepted that Regulation 4 of the TUPE Regulations provides that a remedy for an employee in respect of the failure of his / her employer to fulfil its information and consultation obligations can only be sought against the transferee.

The relevant European Directive governing the transfer of undertakings (Council Directive 2001/23/EC) permits Members States to provide that, post-transfer, a transferor and transferee shall be joint and severally liable in respect of employment obligations which arose pre-transfer.  However, the Irish TUPE Regulations do not provide for this, meaning that liability rests entirely with the transferee.

The transferor in this case relied upon the decision of the Court of Justice of the European Union ("CJEU"), Berg v Besselsen [1989] I.R.L.R. 447, which held that unless a member state provides for joint and several liability in its legislation, "the transferor is released from his obligations as an employer solely by reason of the transfer".

Practical implications

This decision confirms that there is no statutory recourse against a transferor employer who, for whatever reason, fails to comply with its obligations under the TUPE Regulations; all liability for such failure passes by law to the transferee employer. Where the TUPE Regulations apply, all rights and obligations arising from a contract of employment existing on the date of transfer will transfer by operation of law to the transferee, which therefore includes all statutory rights and entitlements as well as liabilities for failure to comply with statutory obligations.  This decision confirms once again the critical importance for a transferee employer to ensure that it has sufficient warranty and indemnity protection included in any contractual documentation with a transferor employer.  A transferee will want appropriate warranties and indemnities to protect it against all such liabilities that it may inherit as a result of a TUPE transfer, including liabilities in respect of any failure on the part of the transferor employer to comply with its statutory obligations.