Regulation 13(2) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 clearly provides that:
“Long enough before the relevant transfer to enable the employer of any affected employees to consult the appropriate representatives of any affected employees, the employer shall inform those representatives of …”
After which follows a list of a number of transfer related issues including when the transfer will be taking place, the legal social and economic implications of the transfer and any measures that it is envisaged will be taken.
The Regulation is however silent on how long before the relevant transfer is long enough.
Given the possibility of a protective award (of up to 13 weeks full pay per affected employee) being made if this Regulation is breached the question of ‘how long is long enough’ is one that has troubled both employers and their legal advisers alike. This much vexed question has now been considered by the Employment Appeal Tribunal recently in the case of Cable Realisations Ltd v GMB Northern and while there was little, if any, guidance given by the EAT as to what would be long enough we do now know that two working days is not. Alec Bennett explains more
In this case the transferor, Cable Realisations Ltd (“Cable”) had been making a loss since late 2006 and in May 2007 made a decision to either close or sell off its cable business. Sales brochures were prepared and a non binding purchase offer was received from an Indian based company, Paramount, on 31 May 2007. Cable’s holding company decided to pursue the sale on 28 June 2007. The timetable for the sale then progressed as follows:-
- 3 July 2007 - Cable met representatives from GMB Northern (“GMB”), the appropriate representatives for the affected employees, for the first time.
- 13 July 2007 - Cable posted a notice confirming that due diligence had started.
- 18 July 2007 – Cable posted a further notice confirming it would comply with all its obligations if a transfer took place.
- 25 July – there was a meeting between Cable, Paramount and the GMB at which the timescale for the purchase was expressed in “weeks”.
- 15 August 2007 – Cable received a “measures” letter from Paramount confirming it did not envisage taking any measures (had measures been anticipated compulsory consultation would be required under Regulation 13 of TUPE).
- 15 August 2007 – Cable provided the GMB with the information required by Regulation 13(2) to the GMB and held a meeting with them.
- 17 August 2007 – Cable held a further meeting with the GMB and answered questions they had arising from the information they had provided on 15 August.
- 20-31 August 2007 – Cable’s annual 2 week shut down took place. 99% of the GMB’s employee’s were on holiday and 85% were away from home.
- 3 September 2007 – the transfer completed
The Tribunal Claim
The GMB bought a claim alleging Cable had failed to comply with its Regulation 13 obligations and the Tribunal agreed. In particular the Tribunal found that:-
- Cable had breached Regulation 13 by failing to provide the Union with the relevant information required by Regulation 13(2) - which it had done on 15 August - long enough before the transfer took place on 3 September. Because of the factory shut down there had been insufficient time i.e. only 2 working days between the 2 dates.
- The Tribunal awarded 3 weeks wages as damages for each of the GMB’s employee’s - suggesting the maximum 13 week award was for a failure both to inform and consult (not just inform in time as in this case) and therefore not appropriate in this case.
Cable appealed the liability finding and the GMB appealed against the amounts awarded.
The EAT dismissed Cable’s appeal on the basis that:-
- Even though compulsory consultation was not triggered here, the provision of information required by Regulation 13(2) was to assist in voluntary consultation prior to the transfer. Therefore consultation should take place while the proposals were still at a formative stage, and allow adequate time for the representatives to respond to the information provided and also adequate time for the company to then consider the responses.
- In this case to fully engage in meaningful consultation, GMB needed to be able to speak to their members and this was not possible during the factory fortnight shutdown.
The GMB also appealed the Tribunal’s decision on the basis that the amount awarded was too low. While the EAT agreed that the Tribunal had misunderstood the maximum protective award of pay to apply in cases where there had been a failure to both inform and consult (they confirmed the maximum applies to any breach of Regulation 13) they upheld the decision to award 3 weeks pay only. In giving their decision on this point the EAT rejected the arguments for a higher or lower award and concluded that “Like baby bear’s porridge, it was just right.”
What does this mean for you?
- In the absence of any specific guidance being given by the EAT it appears as if employers should allow sufficient time between the provision of information pursuant to Regulation 13 and the date of the transfer for meaningful consultation to take place, even if the consultation is not compulsory under Regulation 13.
- Longer time should be allowed especially if, for any period during that time, the undertaking will be closed or significant numbers of affected employees will be absent from the workplace.
- Meaningful consultation requires sufficient time for responses to be given and considered – only when this occurs will it be like baby bear’s porridge - just right!