Transferor should have consulted workforce on administrative changes to pay arrangements

Todd v Strain and others EATS/0057/10

TUPE transfers | informing and consulting | measures in relation to transfer

The Employment Appeal Tribunal (EAT) has held that a transferor should have consulted staff on administrative changes to pay arrangements on a TUPE transfer. 

Implications for employers

  • It is important to tell the entire workforce in writing that a transfer is to take place and invite them to a meeting to discuss the proposals. Individuals unable to attend should have the opportunity to raise concerns individually with line managers or the HR department. 
  • This case appears to blur the line between administrative changes that are an inevitable consequence of a transfer (no consultation required) and administrative changes that are a departure from normal practice (consultation required). If in doubt, it is always better to consult, especially if the issue concerns an important area such as pay. 

Ms Todd owned a care home that was sold to Care Concern (GB) Ltd on 4 January 2008, resulting in a TUPE transfer. The workforce found out about the transfer to a new employer at a hastily arranged meeting on 20 November 2007 that was attended by under one-third of the total workforce. At the meeting, they were told that their jobs were safe, but were not given any other information. The news quickly spread among the other employees. There was no other consultation with staff prior to the transfer. One of the consequences of the transfer was a change to some of the arrangements by which staff were paid, including a change to the date on which they were paid their wages. 

Thirty-two employees brought an employment tribunal claim for a failure to inform and consult appropriate employee representatives about measures that were envisaged being taking in connection with the transfer, contrary to reg.13(2) and (6) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246). The tribunal identified some administrative changes to pay arrangements, including the change to employees' normal payment date, as measures about which that the transferor should have consulted the workforce. The tribunal ordered the transferor to pay each claimant the maximum permitted protective award of 13 maximum weeks’ pay under reg.15(8) of the Regulations, finding that the failure to inform and consult on changes to pay arrangements had caused "needless worry" to employees. It was decided that the transferee was not at fault. 

The EAT agreed that the transferor had failed to consult on relevant measures, namely the changes to pay arrangements. It said that, although administrative arrangements of this kind are usually necessary in the context of a transfer and it was not at all clear that there was any disadvantage to employees, the measures were not an inevitable consequence of the transfer. The legislation does not prescribe that the effect of a measure must be disadvantageous to trigger the requirement to consult. In addition, it could not be said that the changes were so trivial as to make consultation unnecessary. It is not difficult to imagine how any change to pay arrangements with which employees are familiar could be unsettling. The sums involved were no doubt small, but it had to be borne in mind that many of the employees in question were low paid. 

However, the EAT disagreed with the amount of the protective award that the tribunal had given to the claimants. The EAT acknowledged that it was not good enough for the transferor to make an announcement about the transfer at a meeting that was attended by less than one-third of the workforce, leaving the rest to learn the information at second hand. It went on to say that the failure was not at the most serious end of the scale: it was not the case that no information had been given to the workforce at all. There had been a staff meeting and employees had been given at least some basic information and, importantly, a reassurance that their new employer would be making no changes in staffing or terms and conditions following the transfer. It was realistically understood and intended that that information would come to the attention of those not attending the meeting. For these reasons, the amount of the protective award for each claimant was reduced to seven weeks' pay. 

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