Do I need to consult with employees about making a transfer?

Something many small employers are unsure about is the extent to which they have to consult employees about an upcoming business transfer. Whilst you are not required to get your employees’ agreement to the transfer taking place, there does need to be some information given and consultation needs to take place. In this article we look at exactly what is required in terms of employee consultation.

What are my consultation obligations?

Regulation 13 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE Regulations) requires both the transferor (the existing employer) and the transferee (the new employer) to inform and consult with their ‘affected’ employees about any transfer, ahead of when it happens.

There are no specified minimum time periods for consultation in relation to a TUPE transfer (as opposed to those specified in relation to collective consultation for redundancy), however, consultation should be ‘long enough before the relevant transfer to enable the employer of any affected employees to consult the appropriate representatives’. For small employers with fewer than 10 employees, things are a bit more relaxed in that employers can inform and consult directly with affected employees if there are no existing representatives.

It is worthwhile noting ‘affected’ employees does not only refer to those who are transferring. For example, an employee who isn’t going to transfer might be affected if their current role requires them to do anything in connection to the part of the business which is transferring.

Who are the appropriate representatives?

If the employer recognises a trade union, then they should inform and consult with the union representatives. Where there is no union recognised, the employer should meet with existing employee representatives or new ones elected specifically for the transfer. If the employer is to inform and consult with existing reps, then it needs to ensure the remit of the reps covers this type of responsibility. If there is a mixture of both union and employee reps, meetings can be joined to avoid duplication.

What information should be provided?

Employers need to cover the basics – the fact the transfer is happening, when it will happen and the reasons why it is happening. Employers also have to provide information about the legal, economic and social implications of the transfer. This is not actually defined in the TUPE Regulations; however, it is recommended that this section is detailed enough to enable an employee to make a reasonable assessment of the impact the transfer may have on them.

Legal implications will cover whether TUPE actually applies to the transfer and what effect this has on the employees’ legal rights.  Employers should also cover whether there are likely to be any redundancies, a relocation or changes to terms and conditions.

Economic implications cover any potential impact on individual pay and benefits but can (and should) also include information on the financial viability of the transferee.

Social implications will cover instances where there are any proposed changes to working hours, working patterns or shifts (closely linked to measures below).  It can also include any planned relocation – so information would need to be provided on where the business is being relocated to plus any detail about the new location such as house prices and local schools to enable employees to make informed decisions as such a scenario may have a major effect on their families.

The duty to consult arises if either transferor or transferee intends to take any measures (read changes) in connection to their own employees. So, for example, a transferee’s obligation is to provide information regarding measures to the transferor so they can inform their own employees of same.  However, it will be the transferee that actually carries out consultation after the transfer has taken place.

And the final sting in the tail?

A failure to inform and consult can result in a compensation payment of up to 13 weeks gross pay for each affected employee. And there is no cap on gross pay either!

 

As you can see, it is important to consult with employees about making a transfer however if you would like more information and/or advice on TUPE transfers, please do get in touch.