Parties to a Transfer of Undertaking (“TUPE”) have an obligation to inform and consult employees affected by the transfer. Paul Gough reviews two cases relating to failure to consult employees.
Two recent Workplace Relations Commission (WRC) decisions regarding TUPE address the issue of which employer is liable in the event of a breach of the information and consultation requirements with employees. The question of compensation in the event of a “technical” breach of TUPE Regulations is also addressed.
Liability of Transferor
In A General Operative v Beverage Company the claimants brought proceedings against their former employer, the transferor, for failing to comply with its obligation to provide information or consult with the employees prior to their transfer to their new employer, the transferee.
Receivers had been appointed to the transferor in November 2015 and part of its business, including 24 members of staff, transferred to the transferee on that date. The parties did not consult with the employees regarding the transfer of their employment and the employees subsequently filed a complaint with the WRC against their former employer.
In response, the transferor argued that the claimants should have taken their case against their new employer as the employees’ rights and obligations and any liabilities transferred to their new employer at the time of the transfer.
The claimants (and the transferee who was not named as a defendant but who was present as an interested party) argued that the transferor was liable for the breach as it had failed to consult with its own employees. However, the Adjudication Officer determined that the weight of the Regulations were in favour of the transferor and that the correct defendant was their new employer. The proceedings against the transferor could not therefore proceed.
In another recent case, A Technician v An Environmental Services Company, the Adjudication Officer had to consider compensation in circumstances where again the parties had failed to consult with employees prior to their transfer.
The transaction in this case was highly confidential and commercially sensitive and both parties were bound by non-disclosure agreements, consequently the employees were not consulted in advance of the transfer taking place. The Adjudication Officer noted that there were no material changes to the terms and conditions of employment of the employees.
In his decision he noted that legal authorities generally take the view that the requirement to inform and consult employees, while undoubtedly a legal requirement, can be tempered by the circumstances of the situation, particularly where the employees concerned did not suffer any detriment as a result of the transfer.
Accordingly, the Adjudication Officer determined that, while there was a “technical” breach of the Regulations and that this should be brought to the attention of management, financial compensation should not be awarded.
This case may give some comfort to businesses that, for commercial reasons, do not have time to consult with affected employees.