In a recent case the Court of Appeal held that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (the 'TUPE Regulations') only oblige an employer to provide information regarding what it genuinely believes to be the legal, social and economic implications of a proposed business transfer. As such, if an employer incorrectly believes its employees will not transfer under the TUPE Regulations, it will not necessarily be in breach of its obligations by failing to inform the employees of the correct position.
Broadly speaking, the TUPE Regulations provide for:
- protection for employees against dismissal in connection with a business transfer;
- the automatic transfer of employees' employment from the seller to the purchaser, including the transfer of all rights, liabilities and obligations in relation to the transferring employees; and
- the obligation to inform and consult with representatives of the affected employees.
As far as information and consultation is concerned, the information that the employer is required to provide includes: the fact that the transfer is to take place, the proposed date of the transfer and the reasons for it; the legal, economic and social implications of the transfer; and the measures which the employer and the purchaser envisage they will take in relation to any affected employees.
In this particular case the employer was planning to transfer a large number of offices to WH Smith. However, it mistakenly took the view that the TUPE Regulations would not apply, on the basis that its affected employees would either accept voluntary redundancy or be redeployed elsewhere. As a result, the company did not inform and consult with representatives of the affected employees.
The Court of Appeal held that whilst an employer is required to consider the legal implications of any situation of this nature, it cannot be required to warrant the accuracy of its view of the law. This will come as good news to employers who will not necessarily be in breach of their obligations under the TUPE Regulations if they provide the wrong information to their employees, as long as they believed it was correct at the time. However, the question remains as to how difficult it will be for employers to establish that they had a genuine belief that their understanding was correct, especially where legal advice has not been sought.