Nothing but a liability

Appropriate representatives are – in keeping with other employment legislation – recognised Trade Union representatives or, in any other case, elected or appointed employee representatives. They enjoy similar protection against victimisation and rights to time off as in other legislation (take a look at Regulation 9.4).

Regulation 9.5 also establishes additional safeguards applicable in cases where employees are represented by non-Union individuals. Here, any agreement recording a permitted variation must be made in writing and signed by each of the representatives who made it. Where this is not reasonably practicable, it must be completed by a duly authorised agent of that representative.

Before the agreement is made available for signature, the employer must provide all employees to whom it is intended to apply (on the date on which it is to come into effect) with copies of the text and any “guidance as the employees might reasonably require in order to understand it fully”.

The permitted variation to employment contract – in accordance with Article 5.2(b) of the Directive – is one that is designed to safeguard employment opportunities by ensuring the survival of the undertaking, business or part of the business which is the subject of the relevant transfer. Variations connected with the transfer and present for an economic, technical or organisational reason entailing changes in the workforce are, in any event, permitted in insolvency or otherwise by Regulation 4.5(a), which remains unaffected.

Employee liability information

During the UK’s presidency of the European Commission in the first half of 1998, amendments allowing the promulgation of the revised Acquired Rights Directive 98/50 were duly agreed. In particular, one provision – concerned with employee liability information – is of some practical importance to the UK.

Article 3(2) of what is now Council Directive 2001/23/EC says: “Member States may adopt appropriate measures to ensure that the transferor notifies the transferee of all the rights and obligations which will be transferred to the transferee under this article, so far as those rights and obligations are – or ought to have been – known to the transferor at the time of the transfer. A failure by the transferor to notify the transferee of any such right or obligation shall not affect the transfer of that right or obligation, and the rights of any employees against the transferee and/or transferor in respect of that right.”

This article is, of course, optional and has been taken up through Regulation 11 of the TUPE Regulations 2006. Under Regulation 11, the transferor has to notify the transferee of the employee liability information of any person employed by him or her who is assigned to the organised grouping of resources or employees that is the subject of a relevant transfer.

Employee liability information covers the following areas:

• the identity and age of the employee;
• those particulars of employment that an
• employer is obliged to give an employee pursuant to Section 1 of the Employment Rights Act 1996;
• information relating to any disciplinary

procedures against an employee, or grievance procedure initiated by an employee within the previous two years under circumstances where the Employment Act 2002 (Dispute Resolution) Regulations 2004 apply;

• information relating to any Court or tribunal
• case claim or action brought by an employee against the transferor within the previous two years, and that the transferor has reasonable grounds to believe the employee may bring against the transferee arising out of the employee’s employment with the transferor;
• information regarding any collective
• agreement which will take effect after the transfer in its application to the employee pursuant to Regulation 5 of TUPE.

The information has to be supplied in writing, or otherwise be made available to the transferee in a readily accessible form. It has to contain details as at a specified date not more than 14 days before the date on which the information is notified to the transferee.

Assigned employee transfer

The duty to provide employee liability information covers any individual who would have been employed by the transferor and assigned into the organised grouping of resources or employees, and who is the subject of a relevant transfer if he or she had not been dismissed under the circumstances described in Regulation 7(1) of TUPE.

This includes (where the transfer is effected by a series of two or more transactions) a person so employed or assigned, or who would have been so employed and assigned before any of those transactions.

In other words, the information has to be supplied in relation to any assigned employee transferring under the TUPE Regulations, and any person who might have transferred had he or she not been automatically and unfairly dismissed under Regulation 7.

Following notification of the employee liability information, the transferor has to notify the transferee in writing of any change in that detail. Notification under the Regulation has to be given not less than 14 days before the relevant transfer – or, if circumstances dictate, as soon as is reasonably practicable thereafter.

Notification may be given under the Regulation in more than one instalment, and either indirectly or directly through the involvement of an independent third party.

In calculating the overall amount of compensation, the employment tribunal must pay particular regard to any loss sustained by the transferee that’s attributable to the matters brought up in complaints

The remedy for failure

If there is a breach of Regulation 11, the transferee can then present a complaint to an employment tribunal that the transferor has failed to comply. Such a complaint must be brought before the end of the period of three months beginning with the date of the relevant transfer (or within such further period as the tribunal considers reasonable wherever its members are satisfied that it was not reasonably practicable for the complaint to be presented before the end of this period).

If the tribunal finds the complaint well founded, it has to declare as such, and may well make an award of compensation to be paid by the transferor to the transferee. The amount of compensation equates to what the tribunal considers just and equitable given the circumstances, and is subject to a minimum of £500 per employee (unless the tribunal deems a lesser sum appropriate).

In calculating the overall amount of compensation, the tribunal must pay particular regard to any loss sustained by the transferee that’s attributable to the matters brought up in complaints. There must also be due consideration of the terms of any contract between the transferor and the transferee relating to the transfer under which the transferor may be liable to pay any sum to the transferee in respect of a failure to notify him or her of any employee liability information.

Finally, Regulation 12(6) makes it clear that there’s a duty to mitigate losses, while Regulation 12(7) incorporates the provisions of Section 18 of the Employment Tribunals Act 1996, allowing for claims to be conciliated.

Joint and several liability

Directive 2001/23 gives Member States the option of incorporating joint and several liability in respect of obligations which – aside from such provision being made – would otherwise fall exclusively on the transferee.

The Department of Trade and Industry proposes take-up of this option in two areas. The first is in respect of liability under Regulation 15 for failure to inform and consult appropriate employee representatives under Regulation 13 of the legislation. This seeks to address the problems created in those cases where it is held that liability for a transferor’s breach of what is presently Regulation 10 of the TUPE Regulations 1981 nonetheless passed exclusively to the transferee.

The second area concerns liability for personal injury in those cases where a transferor employer (for instance in the public sector) is not obliged to carry employer’s insurance under the Employer’s Liability (Compulsory Insurance) Act 1969 (and the transferee is thereby unable to take advantage of the employer’s insurance cover by virtue of the decision in the 2000 case involving Bernadone and the Pall Mall Services Group).

Here, the transferor and transferee are held jointly and severally liable in respect of personal injury liability arising from the employee’s work carried out with the transferring organisation.

Constructive dismissal

Under Regulation 5(5) of TUPE 1981, an employee may treat their employment as being at an end and claim constructive dismissal whenever there’s a substantial change in his or her working conditions to their detriment.

In the case of Rossiter versus Pendragon plc in 2002, the Court of Appeal held that, for any claim generated under Regulation 5(5), this required a fundamental breach of contract. Regulation 4(9) of TUPE 2006 changes all that, restoring the decision of the EAT and what many view as the true meaning of the Directive.

Under Regulation 4(9), then, the employee may treat the contract as being terminated by the employer upon any substantial change of working conditions to his or her detriment. This will enhance the prospect of employee-initiated claims arising from changes in working conditions (short of any actual breach of contract, of course).

In this instance, no damages are payable by an employer relating to any failure to pay wages to an employee in respect of a notice period that the employee concerned has failed to work. However, an employee can present a claim for constructive, unfair dismissal.

The employee also retains the right to claim constructive dismissal arising from a right outside of the Regulations by terminating the contract without notice in acceptance of a repudiatory breach of contract by the employer under Regulation 4(10). Thus the wrongful – and unfair – dismissal claim is preserved.