What information about employees’ terms and conditions does an old employer need to provide to a new employer in a Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) transfer? A recent Employment Appeal Tribunal case, Born London Limited v Spire Production Services Limited [UKEAT/0255/16/LA], considered this point and found that there is no obligation to identify whether or not a particular term is contractual.
TUPE Regulation 11
Where a transfer takes place under TUPE, Regulation 11 states that the old employer should notify the new one of the ‘employee liability information’ of any employees that are being transferred. This includes information such as identity and age, whether any disciplinary measures have been taken against them, etc. If the outgoing employer fails to comply with this, Regulation 12 of TUPE enables the incoming employer to issue a claim in the Employment Tribunal against them. The tribunal can order the old employer to pay compensation of not less than £500 per transferring employee.
Non-contractual bonuses
The employee liability information in the case of Born related to employees’ contracts of employment. Spire had told Born that Christmas bonuses were non-contractual. However, after the transfer, employees argued that they were contractually entitled to a Christmas bonus. The facts supported the employees, not least because bonuses calculated under a specific formula had always been paid. Born therefore brought a claim against Spire because of the inaccurate information that was given, which was argued to be a breach of Regulation 11.
Particulars of employment
At the first instance, the Employment Tribunal held that there had been no breach of Regulation 11. The tribunal found that, although there was an obligation to provide the particulars of employment to the incoming employer, the duty did not extend to correctly labelling whether an entitlement was contractual or non-contractual.
This decision was upheld by the Employment Appeal Tribunal, which further explained that Spire, in giving information about the nature of the Christmas bonus, had in fact gone beyond what Regulation 11 required them to do and therefore whether the information given was incorrect did not amount to a breach of that regulation.
Due diligence
The case of Born serves as a reminder to incoming employers to undertake thorough due diligence and ensure that they request the necessary warranties and indemnities from the old employer.
Finally, it also demonstrates that strict reliance should not be placed on Regulation 11 as a means to compensate an incoming employer that is given incorrect information about contractual remuneration when a TUPE transfer takes place.
For more information on employee liability information any of the issues raised in this article, contact Kwadwo Boadu in the Leeds Employment team by emailing [email protected] or 0113 368 8043.
