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Employee Liability Information

Background

Born London Limited (“Born”) took over a printing contract from Spire Production Services Limited (“Spire”) and this amounted to a service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”).

Under regulation 11 of TUPE, a transferor (which in this case was Spire) is required to provide a transferee (Born) with employee liability information which includes particulars of remuneration for transferring employees.

In accordance with regulation 11 of TUPE, Spire provided the employee liability information to Born which included a statement that a Christmas bonus was non-contractual. However, the Christmas bonus turned out to be a contractual payment and Born contended that Spire had given incorrect employee liability information and was therefore in breach of TUPE.

Born made a claim for £100,000 compensation to the Employment Tribunal to reflect its loss over the duration of the contract.

Decision

The question for the Employment Tribunal to decide was whether the TUPE regulations required a transferor to specify whether a term was contractual or non-contractual. On reading the TUPE regulations it held that there was no such requirement. All regulation 11 specified was that a transferor provides a transferee with particulars of employment as defined by section 1 of the Employment Rights Act 1996.

The Employment Appeal Tribunal dismissed Born’s appeal agreeing that the TUPE regulations do not require a transferor to state whether an element of remuneration is contractual or non-contractual.

Comment

It is important that transferees undertake thorough due diligence on employee payments to avoid any oversights. It is also advisable to have a contract in place which includes warranties and indemnities to deal with compensation for incorrect or incomplete employee liability information.

If you would like to speak to us about TUPE issues, please feel free to email us  or contact us on 0191 282 2880 for a no obligation chat.

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