June 10, 2022

Informing and consulting on a TUPE transfer – where does liability lie?

Posted in Employment

What is TUPE?

TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006. The regulations are far-reaching and aim to protect UK employees when their employment is transferred to a new entity.  This can be in the context of a business sale, a merger, a service provision chase or even an intra-group reorganisation.

Where an entity is transferred under TUPE, the outgoing employer (the transferor) and the incoming employer (the transferee) both owe an array of obligations both to each other, and to employees affected by the transfer. One such obligation is the duty to inform and where appropriate, consult with the representatives of those employees affected by the transfer.

Obligation to inform

‘Long enough’ before a relevant transfer, the transferor is to provide the representatives of affected employees with the following information:

  1. The fact of the transfer, i.e. confirmation there is to be a transfer, together with the proposed date of such transfer and the reasons for it;
  2. The legal, economic and social implications of the transfer for affected employees.
    • Legal implications may include whether TUPE is likely to apply and the impact of the transfer on the employees’ legal rights.
    • Economic implications may include any affect on the employees’ pay.
    • Social implications may include information regarding changes in working hours, or if the transferee intends to  move the business, information about the new location
  3. The measures envisaged by the transferor (measures the transferor will take in connection with the transfer and in relation to affected employees).
  4. The measures envisaged by the transferee (measures the transferee envisages taking in relation to the transferring employees in connection with the transfer)

Whilst there is no timeframe specified by which the transferor must provide the above information, ‘long enough’ is taken to mean in good time and in any event enough time for sufficient consultation to take place.

Measures envisaged

Whilst the transferor must provide information to affected employees regarding any measures it envisages making in connection with the transfer, it must also do the same for those measures the transferee envisages making. This obligation imposes a reciprocal duty on both transferor and transferee to communicate and share information with each other, for the purposes of providing accurate information to the affected employees. ‘Measures’ is interpreted widely and covers any action, step or arrangement.

Special Circumstances

An employer has a defence for failure to inform or consult if it can show there were special circumstances which made it “not reasonably practicable” for information to be given or consultation to take place, and that it had done the best it could to comply in the circumstances. Where this defence is raised by the transferor, the transferee will be added as a party to proceedings.


If the employer fails to comply with the above requirements, it may be ordered to pay compensation to each affected employee, of up to 13 weeks’ gross pay. It is worth noting that there is no statutory cap on one weeks’ pay – it is actual pay.

Owing to the reciprocal duty as noted above, both the transferor and the transferee may be held jointly and severally liable for any compensation awarded.

The Case in Dispute

The Employment Appeals Tribunal (EAT) have recently delivered their judgment in Clark v Middleton and another. The Claimant worked for Ms Middleton, a sole trader who ran Black Dog Hydrotherapy, a business providing hydrotherapy treatment for injured dogs. When Ms Middleton retired, she transferred the business to a company called Black Dog Hydrotherapy Ltd (BDH Ltd). BDH Ltd had been set up by one of Ms Middleton’s employees. TUPE applied to the transfer and the Claimant’s employment transferred to BDH Ltd.

Following the transfer, the Claimant resigned claiming BDH Ltd intended to make changes to employees’ contracts and she was not informed of this prior to the transfer. The Claimant brought two claims, the first against Ms Middleton for failure to inform or consult and the second against BDH Ltd for unfair dismissal and unpaid wages and holiday pay.

Prior to the tribunal hearing, the Claimant and BDH Ltd reached a COT3 settlement through ACAS. The Claimant’s claim against BDH Ltd was consequently withdrawn and dismissed. The Claimant’s remaining claim against Ms Middleton proceeded to Tribunal and focused on two issues:

  1. The fact Ms Middleton had failed to inform the Claimant the new employer was BDH Ltd (Ms Middleton had allegedly told the Claimant the employer was to be Mrs Slade Andrews in the capacity of a sole trader); and
  2. The fact Ms Middleton had failed to inform the Claimant as to BDH Ltd.’s envisaged measures to change employee’s contracts of employment, post-transfer.

At the Tribunal hearing, Ms Middleton claimed that she was unable to give the necessary information to the Claimant because BDH Ltd had failed to comply with its duty to provide such information and therefore liability should fall to BDH Ltd. The Tribunal held that Ms Middleton’s defence succeeded and whereas ordinarily BDH Ltd would be joined as a party to proceedings and held jointly and severally liable for any compensation award, the effect of the COT3 settlement was to preclude the Tribunal from making an award against BDH Ltd.

The Tribunal were left to consider whether Ms Middleton had failed to tell the Claimant her new employer would be BDH Ltd, rather than Mrs Slade Andrews personally. On that basis, the Tribunal exercised its discretion and awarded no compensation. On appeal the EAT overturned the Tribunal’s decision to make an award of zero compensation and sent the case back to the Tribunal for reconsideration.

Takeaway Points:

  1. Liability

Both the transferor and transferee may be held jointly and severally liable for a failure to inform and consult with affected employees; however, as noted by the EAT in this case, it is not for the Claimant to name the transferee as a party to proceedings, but rather the onus is on the transferor to raise the transferee’s failings as its defence. Transferees therefore should be aware of the liability that may be imposed on them if they fail to provide adequate information as to the measures they envisage taking.

  1. Obligation to Inform

Both the transferor and transferee owe a duty to affected employers to provide all information required by TUPE. Information must be provided long enough before the relevant transfer and therefore parties are encouraged to ensure information is released as and when it is available, rather than waiting to release all information at one time.

  1. Settlement

Claims for failure to inform and consult under TUPE can only be settled under a COT3 agreement reached via ACAS (and not a normal settlement agreement). The Tribunal’s finding in this case that reference to “all claims” being settled was wide enough to encompass the transferee’s failure to inform and consult suggests similar drafting is enough to preclude any compensation being awarded against the transferee.

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