Employment Rights – Transfer of an Undertaking

Part 5 – Information and consultation rights

This section discusses:

• the requirements in the Regulations for the transferor employer to provide information to the new employer about the transferred employees before the relevant transfer takes place; and
• the requirements in the Regulations on both the new and transferor employers to consult representatives of the affected workforce before the relevant transfer takes place.
• These requirements are discussed in turn.

(A) Disclosure of "employee liability information" to the new employer

The transferor employer must provide the new employer with a specified set of information which will assist him to understand the rights, duties and obligations in relation to those employees who will be transferred. This should help the new employer to prepare for the arrival of the transferred employees, and the employees also gain because their new employer is made aware of his inherited obligations towards them.

The information in question is :

• the identity of the employees who will transfer;
• the age of those employees;
• information contained in the "statements of employment particulars" for those employees;
• information relating to any collective agreements which apply to those employees;
• instances of any disciplinary action within the preceding two years taken by the transferor in respect of those employees in circumstances where the statutory dispute resolution procedures apply ¹⁰;
• instances of any grievances raised by those employees within the preceding two years in circumstances where the statutory dispute resolution procedures apply ¹¹; and
• instances of any legal actions taken by those employees against the transferor in the previous two years, and instances of potential legal actions which may be brought by those employees where the transferor has reasonable grounds to believe such actions might occur.

If any of the specified information changes between the time when it is initially provided to the new employer and the completion of the transfer, then the transferor is required to give the new employer written notification of those changes.

The information must be provided in writing or in other forms which are accessible to the new employer. So, it may be possible for the transferor to send the information as computer data files as long as the new employer can access that information, or provide access to the transferor’s data storage. Likewise, in cases where a very small number of employees are transferring and small amounts of information may be involved, it might be acceptable to provide the information by telephone. However, it would be a good practice for the transferor to consult the new employer first to discuss the methods which he can use.

The specified information may be given in several instalments, but all the information must be given. The information may also be provided via a third party. For example, where a client is re–assigning a contract from an existing contractor to a new contractor, that client organisation may act as the third party in passing the information to the new contractor.

This information should be given at least two weeks before the completion of the transfer. However, if special circumstances make this not reasonably practicable, the information must be supplied as soon as is reasonably practicable.

Q. What is the “statement of employment particulars”?

A. All employers are under a legal obligation to provide each employee in writing with basic information about their employment. That information is called the "written statement of employment particulars" (see the BERR guidance Written Statement of Employment Particulars). Among other things, the written statement must set out the remuneration package, the hours of work and holiday entitlements.

Q. What are grievances to which the statutory dispute resolution procedures apply?

A. Broadly speaking, these are grievances which could give rise to any subsequent complaint to an employment tribunal about a breach of a statutory entitlement. For guidance on the statutory dispute procedures see Resolving disputes at work: procedures for discipline and grievance.

Q. What is the “disciplinary action” which must be notified to the transferee?

A. This is action taken under formal disciplinary procedures which the employer is required to follow under the Employment Act 2002 (Dispute Resolution) Regulations 2004. They do not include oral or written warnings or suspensions on full pay. For guidance on those Regulations, see the BERR guidance Resolving disputes at work: procedures for discipline and grievance.

Q. How will the new employer decide whether it is reasonable to believe that a legal action could occur?

A. This is a matter of judgment and depends on the characteristics of each case. So, where an incident seems trifling – say, where an employee slipped at work but did not take any time off as a result – then there is little reason to suppose that a claim for personal injury damages would result. In contrast, if a fall at work led to hospitalisation over a long period or where a union representative raised the incident as a health and safety concern, then the transferor should inform the transferee accordingly.

Q. Can the transferor supply some information in the form of staff handbooks, sample contracts or the texts of collective agreements?

A. It is open to the transferor to provide such documentation if it would assist. Providing information in that form might also be easier for both parties to handle. Again, it would make sense for parties to discuss in advance how information should be provided.

Q. What are the circumstances where it may not be reasonably practicable to provide the information two weeks in advance of the transfer occurring?

A. These would be various depending on circumstances. But, clearly, it would not be reasonably practicable to provide the information in time, if the transferor did not know the identity of the new employer until very late in the process, as might occur when service contracts are re–assigned from one contractor to another by a client, or, more generally, when the transfer takes place at very short notice.

Q. Can the transferor and the new employer agree between themselves that this information should not be provided by contracting out of the requirement?

A. No. There is no entitlement to contract out of the duty to supply employee liability information because that would disadvantage the employees involved.

(B) Consultations with the affected workforce

The Regulations place a duty on both the transferor employer and new employer to inform and consult representatives of their employees who may be affected by the transfer or measures taken in connection with the transfer.

Those affected employees might include:

• those individuals who are to be transferred;
• their colleagues in the transferor employer who will not transfer but whose jobs might be affected by the transfer; or
• their new colleagues in employment with the new employer whose jobs might be affected by the transfer.

Long enough before a relevant transfer to enable the employer to consult with the employees’ representatives, the employer must inform the representatives:

• that the transfer is going to take place, approximately when, and why;
• the legal, economic and social implications of the transfer for the affected employees;
• whether the employer envisages taking any action (reorganisation for example) in connection with the transfer which will affect the employees, and if so, what action is envisaged;
• where the previous employer is required to give the information, he or she must disclose whether the prospective new employer envisages carrying out any action which will affect the employees, and if so, what. The new employer must give the previous employer the necessary information so that the previous employer is able to meet this requirement.

If action is envisaged which will affect the employees, the employer must consult the representatives of the employees affected about that action. The consultation must be undertaken with a view to seeking agreement of the employee representatives to the intended measures.

During these consultations the employer must consider and respond to any representations made by the representatives. If the employer rejects these representations he must state the reasons.

If there are special circumstances which make it not reasonably practicable for an employer to fulfil any of the information or consultation requirements, he must take such steps to meet the requirements as are reasonably practicable.

Who should be consulted about the transfer?

Where employees who may be affected by the transfer are represented by an independent trade union recognised for collective bargaining purposes, the employer must inform and consult an authorised official of that union. This may be a shop steward or a district union official or, if appropriate, a national or regional official. The employer is not required to inform and consult any other employee representatives in such circumstances, but may do so if the trade union is recognised for one group of employees, but not for another.

Where employees who may be affected by the transfer are not represented by a trade union as described above, the employer must inform and consult other appropriate representatives of those employees. These may be either existing representatives or new ones specially elected for the purpose. It is the employer’s responsibility to ensure that consultation is offered to appropriate representatives. If they are to be existing representatives, their remit and method of election or appointment must give them suitable authority from the employees concerned. It would not, for example, be appropriate to inform and consult a committee specially established to consider the operation of a staff canteen about a transfer affecting, say, sales staff; but it may well be appropriate to inform and consult a fairly elected or appointed committee of employees, such as a works council, that is regularly informed or consulted more generally about the business’s financial position and personnel matters.

Arrangements for elections

If the representatives are to be specially elected ones, certain election conditions must be met:

• The employer shall make such arrangements as are reasonably practical to ensure the election is fair;
• The employer shall determine the number of representatives to be elected so that there are sufficient representatives to represent the interests of all the affected employees, having regard to the number and classes of those employees;
• The employer shall determine whether the affected employees should be represented either by representatives of all the affected employees or by representatives of particular classes of those employees;
• Before the election the employer shall determine the term of office as employee representatives, so that it is of sufficient length to enable relevant information to be given and consultations to be completed;
• The candidates for election as employee representatives are affected employees on the date of the election;
• No affected employee is unreasonably excluded from standing for election; and
• All affected employees on the date of the election are entitled to vote for employee representatives.

The employees entitled to vote may vote as many candidates as there are representatives to be elected to represent them; or, if there are to be representatives for particular classes of employees, for as many candidates as there are representatives to be elected to represent their particular class of employee.

The election is conducted so as to secure that:

• so far as reasonably practicable, those voting do so in secret; and
• the votes given at the election are accurately counted.

Where an employee representative is elected in accordance with these rules but subsequently ceases to act as such and, in consequence, certain employees are no longer represented, another election should be held satisfying the rules set out as above.

The legislation does not specify how many representatives must be elected or the process by which they are to be chosen. An employment tribunal may wish to consider, in determining a claim that the employer has not informed or consulted in accordance with the requirements, whether the arrangements were such that the purpose of the legislation could not be met. An employer will therefore need to consider such matters as whether:

• the arrangements adequately cover all the categories of employees who may be affected by the transfer and provide a reasonable balance between the interests of the different groups;
• the employees have sufficient time to nominate and consider candidates;
• the employees (including any who are absent from work for any reason) can freely choose who to vote for;
• there is any normal company custom and practice for similar elections and, if so, whether there are good reasons for departing from it.

Rights of employee representatives

Representatives and candidates for election have certain rights and protections to enable them to carry out their function properly. The rights and protections of trade union members, including officials, are in some cases contained in separate provisions but are essentially the same as those of elected representatives described below. (For further details of the rights of trade union members see the BERR guidance Union membership: rights of members and non–members available at www.berr.gov.uk/employment/employment-legislation/employment-guidance/page20829.html).

The employer must allow access to the affected workforce and to such accommodation and facilities, e.g. use of a telephone, as is appropriate. What is "appropriate" will vary according to circumstances.

The dismissal of an elected representative will be automatically unfair if the reason, or the main reason, related to the employee’s status or activities as a representative. An elected representative also has the right not to suffer any detriment short of dismissal on the grounds of their status or activities. Candidates for election enjoy the same protection. Where an employment tribunal finds that a dismissal was unfair, it may order the employer to reinstate or re–engage the employee or make an appropriate award of compensation (see also Unfairly dismissed? available at www.berr.gov.uk/employment/employment-legislation/employment-guidance/page30728.html). Where an employment tribunal finds that a representative or a candidate for election has suffered detriment short of dismissal it may order that compensation be paid.

An elected representative also has a right to reasonable time off with pay during normal working hours to carry out representative duties. Representatives should be paid the appropriate hourly rate for the period of absence from work. This is arrived at by dividing the amount of a week’s pay by the number of normal working hours in the week. The method of calculation is similar to that used for computing redundancy payments (see Redundancy entitlement: Statutory rights available at www.berr.gov.uk/employment/employment-legislation/employment-guidance/page15686.html).