Transfer of Business: Employer obligations under TUPE

Consider a business which is being sold imminently with all staff transferring to the purchaser. There is very little time to inform and consult the employees about the sale before it happens and they may be entitled to bring claims for a protective award. The question is who can bring this claim, what is the time limit for bringing the claim, and how much could an employee be awarded if they were successful at Tribunal?


Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”), there are certain obligations on a selling company, referred to as a “Transferor” to inform and consult employees affected by the forthcoming transfer. Failure to do that may result in those affected employees or their representatives having the ability to bring a claim to the Employment Tribunal for failure to inform and consult under Regulations 15 and 16 of TUPE. It is therefore critical that these obligations are complied with fully by the Transferor and in good time before the date of the transfer itself.


Who can claim?

Where an employer has not complied with the obligation to inform or consult, then the following individuals may bring a claim to the Employment Tribunal:

  1. any affected employees where there has been a failure to elect employee representatives or for any other connected reason;
  2. any employee representatives, where there has been a failure relating to them;
  3. a trade union in the case of a failure relating to representatives of that trade union.


When should claims be made?

Claims must be brought within 3 months of the date of transfer, although, of course, the Tribunal might allow a later complaint if it is not reasonably practicable to lodge it in time.


How much could be awarded?

The maximum protective award that could be made in relation to each affected employee will not exceed 13 weeks’ gross pay. Importantly, however, note that a week’s pay is not subject to the statutory cap, rather it is calculated on the basis of the employee’s actual gross pay. Therefore, this award in itself could be substantial, particularly where there are several employees who would have such a claim.


The purpose of making the protective award is for the Tribunal to effectively punish the employer for breaching its obligations under TUPE. That said, the Tribunal does have a wide discretion and will look at the seriousness of the employer’s default in relation to the TUPE provisions. Where there has been no informing and consultation at all, Tribunals tend to take the view that the maximum compensation should be awarded, unless of course there are mitigating circumstances which mean that a lesser award should be made.


You should be aware also that claims for failure to inform or consult are completely separate and distinct from any claim that the affected employee may have for unfair dismissal related to the transfer and which will, of course, be automatically unfair, unless the employer can show that the dismissal was for an “ETO” reason, which may include redundancy.


As you can see, the myriad of issues arising from TUPE can be extremely complex and we would certainly recommend that legal advice should be taken as early on in the process as possible, so that claims from the affected employees can be avoided at all costs.


While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.