Pre-transfer consultation on collective redundancies

One of the most damaging and controversial changes to TUPE under the 2014 Regulations is to allow pre-transfer consultation on collective redundancy dismissals. The new rules, which affect all transfers on or after 31 January 2014, allow a prospective transferee to start consulting with the transferor’s workforce on “proposed redundancies” before the transfer date, in other words, before becoming their employer, and for this pre-transfer consultation to count towards the minimum statutory period of 30/45 days’ collective redundancy consultation (see page 324). Commentators, including the TUC, have pointed out 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 of the employees who are to be made redundant.

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 prospective employer 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 get no say as to whether or not pre-transfer consultation with the transferee takes place. However, any consultation must be meaningful or else risk a protective award.

Even though the transferee can carry out pre-transfer consultation on proposed redundancies, it cannot carry out any dismissals until it becomes the employer, i.e. after the transfer. Any dismissals by a transferor because of a transferee’s need to make redundancies will be automatically unfair (see page 386).

This new law poses many serious practical challenges, as well as being open to challenge as a clear breach of EU law. For more information about challenging an incoming employer’s decision to carry out pre-transfer consultation, see LRD’s booklet, TUPE — a guide to using the law for union reps (http://www.lrdpublications.org.uk/publications.php?pub=BK&iss=1706).

This change, if utilised by incoming employers, will undoubtedly result in an increased number of claims for protective awards.

In practice, the new law is most likely to be used by transferees who operate from a different geographical location, requiring incoming staff to relocate. The introduction of pre-transfer consultation will encourage these transferees to begin consulting before the transfer with workers who are unable to relocate, with a view to carrying out faster redundancy dismissals, as soon as possible after the transfer date.

It is important to remember that 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).