A guide to TUPE information and consultation

In this guide our experts give an outline on what is meant by TUPE information as well as provide an overview of the consultation process. 

1. What is a TUPE obligation?

Regulation 13 of Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) provides that there are obligations to inform and, where appropriate, consult with employee representatives before a TUPE transfer.

This requirement applies to any employees who may be affected by the transfer or by measures taken in connection with the transfer, whether or not they are employed in the undertaking or part to be transferred. They are referred to as ‘affected employees’.

TUPE uses the term ‘transferor’ to describe the original employer and ‘transferee’ to describe the new employer and that language is adopted here.

2. What is the difference between information and consultation?

Specific information must be provided to representatives of affected employees.

Consultation is only required with representatives if the employer (who may be the transferor or transferee) envisages taking measures in relation to the affected employee in connection with a TUPE transfer.

3. Who should you inform/ consult with?

The obligation is on the transferor and the transferee to inform and consult with employee representatives regarding affected employees. TUPE only requires the transferor or transferee to consult with representatives of their own employees.

In practice, it is often only the transferor’s employees who are affected (in particular those transferring). However, some of the existing transferee’s employees may be impacted if, for example, a transfer results in a restructure which impacts upon them.

Employee representatives will either be a recognised trade union or elected employee representatives (which may be existing representatives providing such consultation is covered within their remit or new representatives elected for the purpose of consultation).

If the transferor employs fewer than 10 employees and where there are no employee representatives in place the transferor may inform and consult with the employees directly.

4. When should we start provision of information and, if appropriate, consultation?

The obligations are to inform and consult before a TUPE transfer.

There is no minimum period of time that consultation has to last and there is no requirement that collective consultation has to begin a minimum number of days before the date of the transfer. However, as below, the information must be provided long enough before the transfer to enable the representatives to consult with the affected employees.

5. What information must the transferor give to the transferee

The transferor is under an obligation to provide ‘employee liability information’ (ELI) to the transferee not less than 28 days before a transfer or, if special circumstances make this not reasonably practicable, as soon as reasonably practicable thereafter. Special circumstances here is likely to mean a situation where the identity of the transferee was not known until late in the process or where the transfer takes place at short notice.

ELI means:

• the identity and age of each employee;
• particulars of his or her employment;
• information as to any disciplinary procedure taken against an employee and any grievance procedure taken by an employee within the last two years;
• information of any court or tribunal case, claim or action brought by an employee within the last two years or which the seller has reasonable grounds to believe an employee may bring; and
• information of any collective agreement which will have effect after the transfer.

If the transferor fails to comply with the obligation to supply ELI, the transferee may complain to the Employment Tribunal and may be compensated for the losses suffered as a result of the transferor’s failure to comply. There is a three-month time limit to present such a claim. The compensation awarded in a successful claim would be a minimum of £500 for each employee for who the information was either not provided or was defective. The Tribunal is able to award a lesser sum if it considers it is inequitable and/ or unjust to award that minimum sum. It is likely there will be some indemnities in any commercial agreements regarding such failings too.

From the ELI the transferee will be able to inform the transferor if there are any ‘measures’ it envisages as a result of the transfer which the transferor can then consult the employees affected about.

6. What information must the transferor give to the employee representatives?

The relevant information that must be provided to the employee representatives:

• The fact of the transfer, the date (or proposed date) when it is to take place and the reasons for it.
• The legal, economic and social implications of the transfer for the affected employees. What is meant by “legal, economic and social implications” will be a question of fact in each case.
• The measures which it is envisaged will be taken in connection with the transfer in relation to “any affected employees” or, if no measures are to be taken, that fact. As explained this information will have to be obtained from the transferee.
• The transferee has a statutory obligation to provide ELI to the transferor in time to allow the transferor to perform its obligation to give the relevant information to the union/ employee representatives.
• The information provided to the representatives must also include “suitable information” relating to the use of agency workers (if any) by the employer. This means:
  • the number of agency workers working temporarily for and under the supervision and direction of the employer;
  • the parts of the employer’s undertaking in which those agency workers are working; and
  • the type of work those agency workers are carrying out.
• Information about agency workers must be given in respect of the transferor’s entire business, not just that part that is to be transferred, and is not limited to those agency workers who are employees.

7. When do we need to consult?

There must be consultation where the transferee envisages that it will take “measures” relating to the transfer with respect to some/ all affected employees.

This will usually mean that the transferee has a proposal or plan which they intend to implement after the TUPE transfer. The meaning of “measures” has been widely interpreted and may be taken to mean any change. It arguably includes changes to occupational pensions which means in most cases where TUPE applies there will more than likely be measures, thus the requirement to consult will apply.

8. How should we inform/ consult?

The first step is to inform the affected employees of the proposed transfer. This is normally done in a meeting forum or via an announcement. If a union or employee representatives are already in place, the affected employees should be advised of that information and if required consultation will take place with the union. If there are no elected representatives, the employees must be given the opportunity to elect representatives (unless the employer employs less than 10 employees).

Once employee representatives are in place (if they are not already) the relevant information set out above (in point 5) must then be provided to the representatives in writing and it must be accurate. This should really be done on the day they are elected or very soon thereafter.

The representatives must then be given the opportunity to discuss the process with the employees and obtain feedback. They get the employees views and feed them back at the consultation meetings that need to be held with them. Again, there is no minimum number of meetings, but consultation must be meaningful, and this includes having regard to the particular circumstances and how much consultation is reasonable in all of the circumstances.

Only if measures are envisaged in relation to the affected employees as a result of that transfer is there a duty to then proceed to consult.

Consultation should be carried out with a view to seeking agreement to the intended measures. In practice, this means the transferor must properly consider and respond to any representations made by the representatives and negotiate on the anticipated measures although ultimately agreement need not be reached; this is a consultation and not a negotiation.

It is not uncommon for the transferee to seek to agree with the transferor that the transferee shall participate with the transferor in the consultation process with the transferor’s employees to ensure that the employees are properly consulted with and reduce the potential liability for any failure by the transferor to consult to fall to the transferee under TUPE, since liability for such failure is joint and several (meaning liabilities are shared between the transferee and transferor).

While this guide is not intended to cover the situation where there may also be collective redundancy consultation going on at the same time, in some circumstances a transferor may agree that the transferee be allowed to carry out collective consultation in relation to redundancies prior to the transfer. In any event, the dismissals will not be able to take place until after the transfer. The transferor will still not be able to rely on the transferee’s ‘fair reason’ for dismissal as its own potentially fair reason.

9. What are the risks of not complying with this obligation?

Claims can be brought in the Employment Tribunal under the TUPE regulations for compensation.

There is a defence available to the transferor for failure to inform and consult if it can show that there were special circumstances meaning it was not reasonably practicable for information to be given or consultation to take place. They will need to show they did the best they could to comply in the circumstances and this defence is construed very narrowly.

If the Tribunal finds in favour of the complainant, they can make a declaration to award appropriate compensation to ‘such descriptions of affected employees as may be specified in the award’. That can include those who aren’t named claimants.

Appropriate compensation is what the Tribunal considers to be just and equitable having regard to what it considers to be the seriousness of any failings, but it cannot exceed 13 weeks’ gross pay for each affected employee (there is no cap on what the week’s pay is).

The Tribunal can order the transferee to pay this if the claim is against it.

It can order a transferor to pay the award if it upholds a claim against it. However, the Tribunal can also order the transferee to pay the compensation if the transferor can establish it was unable to consult because it did not have the details of proposed measures from the transferee. This is a more complicated issue as the transferor would need to notify the transferee it intended to rely upon this argument in advance.

The Tribunal can also make the transferor and transferee jointly and severally liable for any compensation awarded by the Tribunal against the transferor or any failure by either the transferor or transferee to pay compensation ordered by the Tribunal for a failure to inform and consult.