Pre-transfer consultation on collective redundancies

One of the most damaging and controversial modifications to the TUPE regime made by the last government has been to allow pre-transfer consultation on collective redundancy dismissals. The new rules, which apply to all transfers on or after 31 January 2014, allow an incoming employer to start consulting with the transferor’s workforce on “proposed redundancies” in advance of the transfer date, in other words, before becoming their employer. Under this new law, pre-transfer consultation can count towards the minimum statutory period of 30/45 days’ collective redundancy consultation (see page 333). Commentators, including the TUC, argue that this change to the law breaches the Collective Redundancies Directive (1998/59/EC). This is because the terms of that Directive are clear that collective redundancy consultation must be with the employer.

To bring this change into law, new sections 198(A) and (B) have been added to TULRCA. The new rules allow collective redundancy consultation to be carried out by a transferee before the transfer date provided:

• there is, or is likely to be, a relevant transfer;

• the transferee proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less; and

• at least one of the transferring employees “may be affected by the proposed dismissals or by measures taken in connection with the proposed dismissals”.

Under new sections 198(A) and (B) of TULRCA:

• the transferee can elect whether to consult with representatives of employees of the transferor at risk of redundancy before the transfer date;

• the election must be by written notice to the transferor;

• any consultation can only take place with the transferor’s agreement;

• the transferor is entitled, but not obliged, “to provide information or other assistance” to the transferee to help it carry out pre-transfer consultation;

• the transferee is not allowed to rely on the transferor’s failure to provide information or assistance to justify any breach of the TULCRA information and consultation obligations;

• a transferee can cancel a decision to carry out pre-transfer consultation at any time by written notice to the transferor, in which case, the slate is wiped clean and the pre-transfer consultation has no effect.

Employees and reps are given no say as to whether or not pre-transfer consultation with the transferee takes place. However, reps should remember that any consultation must be meaningful or else the employer risks a protective award (see Chapter 11, pages 340-342).

Even though the transferee can carry out pre-transfer consultation on proposed redundancies, it cannot carry out redundancy dismissals until after the transfer date.

Any dismissals by a transferor because of a transferee’s need to make redundancies will be automatically unfair (see page 404).

In practice, the new law is most likely to be used by incoming employers who operate out of a different geographical base, meaning that incoming staff must relocate. The pre-transfer consultation rules will encourage these transferees to start consulting before the transfer with employees who are unable to relocate, with a view to carrying out redundancy dismissals as soon as possible after the transfer date.

These new rules only affect collective, and not individual, consultation. After the transfer, the transferee must still carry out proper individual redundancy consultation, consider alternative employment options and give full statutory or contractual notice of any dismissals, or else risk unfair dismissal claims (see Chapter 11).

A transferee who targets union reps or activists for redundancy will risk a claim for automatically unfair dismissal under section 105 ERA 96 and section 153 of TULRCA (see Chapter 5).