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

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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.