Uncapped awards for failure to inform and consult on transfer of UK undertakings

16 January 2012 |

A recent decision confirms that protective awards are uncapped for a breach of the information and consultation obligations under UK transfer of undertaking legislation (“TUPE”).

Background

A company purchased a business when it went into liquidation.  This was a relevant transfer for the purposes of TUPE and the employees of the business transferred to the purchasing company.

A number of the employees brought a claim, against both the purchaser and the seller, for breach of the duty to inform and consult under TUPE.  This claim was successful and the claimants were awarded 13 weeks’ pay.  However, the Employment Tribunal applied the statutory cap in determining what constituted a weeks’ pay (which was £350 at the relevant time).

The employees appealed arguing that the statutory cap should not apply to claims of this nature and the Employment Appeal Tribunal agreed with the employees.

Commentary

Confirming that the statutory cap does not apply to protective awards for breach of the information and consultation obligations under TUPE means that breach of this obligation is potentially a high financial risk.  Existing case law provides that the remedy is punitive in effect and so an award of three months will be the norm except where the employer can point to a good reason for a failure to consult.  There will be occasions, particularly in an insolvency situation, where time will be short but if the harsh effect of a protective award is to be avoided, employers should do the best they can in the circumstances.

For further information or to discuss the issues raised, please contact David Widdowson or Stephen Wright on +44 20 3051 5711.

Disclaimer

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

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