The EAT has held that employee liability information provided pursuant to TUPE does not need to specify whether employees' entitlements are contractual or not.
Under TUPE, a transferor has to provide a transferee with prescribed information about the transferring employees. This includes information about the particulars of employment that employers are obliged to provide to employees. These particulars include "the scale or rate of remuneration or the method of calculating remuneration".
Born London Ltd, a print finishing firm, had taken over a contract from Spire Production Services Limited, and this was a TUPE service provision change. Spire provided employee liability information to Born before the transfer, including a statement that a Christmas bonus was non-contractual. Born argued that it was, in fact, a contractual bonus, and that Spire had given incorrect employee liability information and was therefore in breach of TUPE. Born sought over £100,000 in compensation to reflect its loss over the entire span of the contract.
The core issue to be decided by the Employment Tribunal was whether TUPE required a transferor to state if a term about remuneration was contractual: if there was no such obligation, no claim could be pursued in the tribunal. Looking at the drafting of TUPE, and legislation to which it refers, the Employment Tribunal held that that Born's claim had no reasonable prospect of success. Born appealed to the EAT.
The EAT dismissed the appeal. It agreed with the Employment Tribunal that the information to be provided pursuant to TUPE is not confined to contractual matters: some elements of remuneration are often non-contractual, and this information must also be provided. The EAT also held that TUPE does not require a transferor to state accurately whether an element of remuneration is contractual or non-contractual.
What does this means for employers?
Transferors should take a broad approach when providing information on remuneration, and provide information about all elements of remuneration, including the basis of calculation. They do not, however, have to go through the sometimes painful process of deciding whether or not an element of remuneration is or is not contractual.
Where possible, transferors and transferees should have a contractual arrangement setting out what information must be provided by the transferor and a contractual mechanism for compensating transferors to whom inaccurate or incomplete information has been provided. This is likely to provide a more satisfactory remedy than reliance on TUPE.