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Duty to inform and consult under TUPE

It is a popularly held belief that the duty to consult is a strict duty.  This belief has been fuelled to a large extent by various decisions of the UK courts and the ECJ.   However, the EAT, in Royal Mail Group Ltd v Communication Workers Union, has considered the scope of the obligation on employers to inform and consult affected employees with regard to the effect of a proposed TUPE transfer and has suggested that liability may not be as strict as it was once thought.   The EAT holds that where an employer is mistaken in its belief that TUPE does not apply, it will not automatically be in breach of its information and consultation obligations by failing to inform employees of the correct legal position.

RMG Ltd ran a network of post offices. Since 1986, several post offices had been converted to franchise status to be run privately. RMG Ltd had a policy of giving employees employed in the affected post offices the choice of voluntary redundancy or a transfer to another workplace, consistent with a standard mobility clause. RMG Ltd believed having taken legal advice that this meant that TUPE did not apply to transfer the affected employees’ contracts to the new franchisees. When a large-scale franchise arrangement to WHS was proposed in 2006, the Communication Workers Union, asserted that TUPE did apply and that RMG was obliged to inform employees that a TUPE transfer was proposed and to set out its implications for them. RMG Ltd continued to maintain that TUPE did not apply.

The EAT decided that TUPE applied, even if the transfer was allegedly under the mobility clause within the employee’s contract of employment.  RMG Ltd’s belief that TUPE did not apply was therefore erroneous. The EAT however emphasised that this did not mean RMG Ltd’s belief was not genuine. The EAT thought that legislation did not intend to impose a strict liability in this area of the labour relationship.  It therefore considered that a genuine but erroneous belief that TUPE did not apply could be a defence to a claim for failure to consult.

Editor’s Note:  This decision must be welcomed by employers who are too aware of the complexities of TUPE.  The question, is it or is it not TUPE  has haunted even the most resourceful of employers.  This decision would suggest that liability may not automatically follow if they get the answer wrong.  However one most note that RMG Ltd sought external legal advice.  The defence of mistake will not be available if no legal advice was sought. It may also not be available if only internal legal advice is sought, or where the employer has no reason to rely on such advice, i.e. advice given by legal advisers with little or no employment law expertise.  Note also that the defence only avails against claim for failure to consult.  It will not avail against other potential claims such as one for unfair dismissal arising from a TUPE transfer.