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No direct route to compensation from a transferee company under TUPE

Stuart Swan
9th May 2014

In a recent case before the Employment Appeal Tribunal (EAT) a number of claimants had tried to bring claims against the transferee on the basis that it had failed to provide the transferor with information about its proposed measures in advance of the transfer.

 

Under TUPE both transferor and transferee are required to inform the representatives of their respective affected employees of the following:

 

  • The date or the proposed date of the transfer;
  • The reasons for the transfer;
  • The legal, economic and social implications of the transfer for the employees; and
  • Any measures envisaged in relation to the employees.

 

The EAT ruled that complaints about a failure to comply with the obligation to inform can only be brought by an employee or their representative against their employer. In this case, because the claimants were employed by the transferor at the time of the breach, they could only bring their complaints against the transferor. The EAT confirmed that the only route for the employees to get compensation from a transferee in this situation was where the transferor was first sued and then applied to join the transferee to the proceedings as a party. The transferor would then have to demonstrate that it had failed in its obligations under TUPE because of the transferee’s failure to provide the required information to them in the first place.

 

In this case the claimants had already settled or withdrawn their case against all the transferors and so they had no further recourse to compensation. This case serves as an example of the importance of understanding the law at an early stage so that the correct respondent is cited.

 

Of course, where a transferor fails to comply with its information and consultation duties under TUPE through its own fault, liability for such an award is joint and several between transferor and transferee.

 

Find out more about this case here.

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