Consultation
Cases
Royal Mail Group Ltd v Communication Workers Union
[2009] EWCA Civ 1045 [2010] 2 All ER 823, [2010] ICR 83, [2009] IRLR 1046
Community Law
It is common ground that regulation 13(2) must be construed in accordance with the provisions of Community Law which begat it. TUPE 2006 enacts the provisions of Council Directive 2001/23/EC. The previous incarnation of the regulations was the Transfer of Undertakings (Protection of Employment) Regulations 1981 (SI 1981/1794) (‘the 1981 Regulations’), which gave domestic effect to the Acquired Rights Directive (initially enacted as Council Directive EEC/77/187, and amended by Directive 98/50). Council Directive 2001/23/EC did not materially change the concept and effect of a transfer. As the preamble to the Directive observes:
“(8) Considerations of legal security and transparency required that the legal concept of transfer be clarified in the light of the case-law of the Court of Justice. Such clarification has not altered the scope of Directive 77/187/EEC as interpreted by the Court of Justice.”
CWU submits that one can only gain a proper understanding of the obligation placed on employers to inform employees, or representatives of employees, in the context of the provisions relating to automatic transfer themselves. They stress that an analysis of the case law of the ECJ reveals the consistent principle that Article 3(1) of the Directive, which is given effect in domestic law by regulation 4(1) and (2) of TUPE 2006, provides for the automatic transfer of the rights, powers, duties and liabilities of the transferor under or in connection with any contract of employment to the transferee. Thus, the rights conferred on employees by the Directive may not be made subject to the consent either of the transferor or the transferee nor the consent of the employees’ representatives or the employees themselves. Lord Hope summarised the European case law in North Wales Training and Enterprise Council Limited (trading as CELTEC Ltd) v Astley and others [2006] UKHL 29, [2006] ICR 992, HL, at [54], in the following manner.
“From this jurisprudence I would draw these conclusions as to the extent of the reservation. The starting point is to be found in the general rule that the contracts of employment of workers assigned to the undertaking transferred are automatically transferred from the transferor to the transferee on the date of the transfer. Then there is the fact that it is not possible for this rule to be derogated from in a manner unfavourable to the employees. The rights conferred on them by the Directive may not be made subject to the consent either of the transferor or the transferee nor the consent of the employees’ representatives or the employees themselves: Daddy’s Dance Hall, paragraph 14; d’Urso, paragraph 11.”
This principle is given effect to in domestic law by regulation 4(1) and (2) of TUPE which provide that:
(1) Except where objection is made under paragraph (7), a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer, but any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee.
(2) Without prejudice to paragraph (1), but subject to paragraph (6), and regulations 8 and 15(9), on the completion of a relevant transfer—
(a) all the transferor’s rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this regulation to the transferee; and
(b) any act or omission before the transfer is completed, of or in relation to the transferor in respect of that contract or a person assigned to that organised grouping of resources or employees, shall be deemed to have been an act or omission of or in relation to the transferee.
It is a further principle of Community law that an employee has a right to choose his employer and is not obliged to work for an employer whom he has not freely chosen: Katsikas v Konstantinidis [1993] IRLR 179, ECJ, at [31] to [33]. Further, at [35] and [36], it was said that:
It follows from that that the Directive does not oblige Member States to provide that the contract of employment or employment relationship be continued with the transferor in a case where an employee freely decides not to continue the contract of employment or the employment relationship with the transferee. In such cases, it is for the Member States to determine the fate of the contract of employment or of the employment relationship. The Member States may, in particular, provide that in this case, the contract of employment or the employment relationship may be considered as terminated either on the initiative of the employee or on the initiative of the employer. They may also provide that the contract of employment or the employment relationship be continued with the transferor.
Within domestic law this is, in part, given effect to by regulation 4(7) which provides that:
(7) Paragraphs (1) and (2) shall not operate to transfer the contract of employment and the rights, powers, duties and liabilities under or in connection with it of an employee who informs the transferor or the transferee that he objects to becoming employed by the transferee.
The Community principles of automatic transfer and individual freedom are also evident in the Judgment of the ECJ in Celtec Ltd v Astley Case C-478/03 [2005] IRLR 647 at [37] and [38]. It is unnecessary to set out the citations.
CWU submit that the principle of automatic transfer and the freedom of an employee to choose their employer underlines the protective nature of the Directive, and point to the preamble to the Directive where it is said:
“(3) It is necessary to provide for the protection of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded.”
CWU stress that the principle of automatic transfer subject to the right of the individual employee to choose for whom they work, requires employees to have accurate information as to the consequences of a proposed transfer in order that they can make an informed decision as to whether they wish to transfer. CWU’s submission is that it is consistent with the protective nature of the Directive to place an absolute obligation to provide accurate information. The obligation to provide the information is contained in Article 7 of the Directive.
Article 7 of the Directive provides, amongst other matters:
1. The transferor and transferee shall be required to inform the representatives of their respective employees affected by the transfer of the following:
– the date or proposed date of the transfer,
– the reasons for the transfer,
– the legal, economic and social implications of the transfer for the employees,
– any measures envisaged in relation to the employees.
The transferor must give such information to the representatives of his employees in good time, before the transfer is carried out.
The transferee must give such information to the representatives of his employees in good time, and in any event before his employees are directly affected by the transfer as regards their conditions of work and employment.
The obligation under Article 7 was also to be found in the predecessor to the present Directive, Council Directive 75/129/EEC, which was brought into effect in the UK by the 1981 Regulations.
Under the 2006 Regulations Article 7 is given effect by regulation 13. Regulation 13 then provides as follows:
(1) In this regulation and regulations 14 and 15 references to affected employees, in relation to a relevant transfer, are to any employees of the transferor or the transferee (whether or not assigned to the organised grouping of resources or employees that is the subject of a relevant transfer) who may be affected by the transfer or may be affected by measures taken in connection with it; and references to the employer shall be construed accordingly.
(2) Long enough before a relevant transfer to enable the employer of any affected employees to consult the appropriate representatives of any affected employees, the employer shall inform those representatives of—
(a) the fact that the transfer is to take place, the date or proposed date of the transfer and the reasons for it;
(b) the legal, economic and social implications of the transfer for any affected employees;
(c) the measures which he envisages he will, in connection with the transfer, take in relation to any affected employees or, if he envisages that no measures will be so taken, that fact; and
(d) if the employer is the transferor, the measures, in connection with the transfer, which he envisages the transferee will take in relation to any affected employees who will become employees of the transferee after the transfer by virtue of regulation 4 or, if he envisages that no measures will be so taken, that fact.
For the purposes of Regulation 13 the appropriate representatives whom the transferor must inform and consult are defined by Regulation 13(3) which provides:
(3) For the purposes of this regulation the appropriate representatives of any affected employees are—
(a) if the employees are of a description in respect of which an independent trade union is recognised by their employer, representatives of the trade union; or
(b) in any other case, whichever of the following employee representatives the employer chooses—
(i) employee representatives appointed or elected by the affected employees otherwise than for the purposes of this regulation, which (having regard to the purposes for, and the method by which they were appointed or elected) have authority from those employees to receive information and to be consulted about the transfer on their behalf;
(ii) employee representatives elected by any affected employees, for the purposes of this regulation, in an election satisfying the requirements of regulation 14(1).
Thus, in the present case, the affected employees being of a description in respect of which an independent trade union was recognized, the obligation on RMG under Regulation 13(2) was to inform and consult the independent union, CWU.
The obligation to inform and consult extends to employees who are ‘affected’ by the transfer. Thus it is not limited to those whose employment will transfer by reason of the operation of the Regulations. Thus, it was and is not in issue that RMG had an obligation to provide the information set out at 13(2) to the representatives of the affected employees even if RMG’s case was that none actually transferred.
CWU stress that although in this case there are appropriate representatives, if there was no recognised union, or pre-existing employee representatives, and RMG had held an election for employees to elect representatives for the purpose of performing the information and consultation obligations on RMG under regulation 13(2), the obligation to provide the information to inform and consult with those representatives would be exactly the same. Indeed in circumstances in which an employer had been obliged to hold elections but no employees had stood for election, then under Regulation 13(11) the obligation to provide the information remains, but it has to be provided directly to the affected employees. Thus the interpretation of the meaning of the obligation under Regulation 13(2) cannot depend upon the identity of the representative.
CWU contrast the language of Regulation 13(2)(a) and (b) with that used in regulation 13(2)(c) and (d). Under the latter the information to be provided includes information as to any “measures” which the transferor envisages it will take in relation to any affected employees or, if he envisages that no measures will be so taken, that fact; and if the employer is the transferor, the measures, in connection with the transfer, which he envisages the transferee will take. In the case of ‘measures’ there is then a specific obligation on the employer to consult the representatives, of any of the three forms, with a view to be consulted by the employer with a view to seeking agreement as to the measures:-
‘(6) An employer of an affected employee who envisages that he will take measures in relation to an affected employee, in connection with the relevant transfer, shall consult the appropriate representatives of that employee with a view to seeking their agreement to the intended measures.
(7) In the course of those consultations the employer shall—
(a) consider any representations made by the appropriate representatives; and
(b) reply to those representations and, if he rejects any of those representations, state his reasons.’
The precise meaning of measures is not important. It refers to such things as shift patterns. But it is relevant to the construction of 13(2)(b), submit CWU, that 13(2)(c) and (d) are couched in language which is not “absolute” – the obligation to inform relates to what an employer “envisages”.
The scheme for enforcement of the Regulations is contained within Regulation 15. Regulation 15 sets out the basis upon which a complaint alleging a failure to comply with Regulation 13 may be presented to an employment tribunal.
‘(1) Where an employer has failed to comply with a requirement of regulation 13 or regulation 14, a complaint may be presented to an employment tribunal on that ground—
(a) in the case of a failure relating to the election of employee representatives, by any of his employees who are affected employees;
(b) in the case of any other failure relating to employee representatives, by any of the employee representatives to whom the failure related;
(c) in the case of failure relating to representatives of a trade union, by the trade union; and
(d) in any other case, by any of his employees who are affected employees.’
Where the Tribunal finds a complaint under Regulation 13 well-founded it shall make a declaration to that effect and may order the transferor to pay appropriate compensation to such classes of affected employees as may be specified in the award. Regulation 16 provides that ‘appropriate compensation’ is such sum not exceeding thirteen weeks’ pay for the employee in question as the tribunal considers just and equitable, having regard to the seriousness of the failure of the employer to comply with his duty. Guidance was given by the Court of Appeal in Sweeting v Coral Racing [2006] IRLR 252 CA that the award, in common with the protective award in cases of a failure to inform and consult in cases of collective redundancy under Trade Union and Labour Relations (Consolidation) Act 1992 (‘TULR(C)A 1992’) (see Susie Radin v GMB and others [2004] ICR 893 CA), was intended to be penal in nature, rather than solely compensatory, albeit that the use of the words “just and equitable” would entitle a tribunal also to have regard to any actual loss that a claimant employee showed that they had in fact suffered as a result of the failure to consult.
CWU emphasise the fact that the “just and equitable” discretion on compensation enables a Tribunal to consider the culpability of an employer in failing to meet the objective obligation under regulation 13(2)(a) and (b).
Aside from the “just and equitable” nature of the penalty, the Regulations also provide a further set of circumstances where the employer is not subject to the strict nature of the obligation under Regulation 13(2). Regulation 13(9) provides:
‘(9) If in any case there are special circumstances which render it not reasonably practicable for an employer to perform a duty imposed on him by any of paragraphs (2) to (7), he shall take all such steps towards performing that duty as are reasonably practicable in the circumstances.’
Thus, if the employer could show that there were special circumstances which rendered it not reasonably practicable to have complied with the obligation under Regulation 13(2), then the duty becomes a more limited one to take all such steps towards performing that duty as are reasonably practicable in the circumstances.
In the present case at paragraph 6.50 of the Tribunal Decision the ET found that there were no ‘special circumstances’ and RMG did not appeal that finding.”
King & ors -v- Aer Lingus PLC
[2002] 3 I.R. 489
Kearns J.
“ The commitment contained in the letter dated the 30th April, 1990, can only be seen, be it a representation or term of the agreement, as conveying that fleet maintenance work would be available “at a minimum” with the defendant at the point of return for those workers who, having transferred to TEAM in 1990, opted to return to the parent company in 1998 against the backdrop of difficulties described in evidence. For the avoidance of any doubt, however, I find that the assurance contained in Mr. O’Neill’s letter of the 30th April, 1990, was both a representation and a term of the agreement and that, insofar as it may be regarded as a representation, the defendants, in making it, were under the duty of care alluded to in Hagen & Ors. v. ICI Chemicals and Ploymers Limited [2002] I.R.L.R. 31. It is proper to record that the defendants did not deny the existence of such a duty in a “transfer of undertaking” situation, which for all practical purposes existed in this case, but rather sought to argue that the plaintiffs had failed to plead any specific misrepresentations. The duty of care, it seems to me, is self evident and no more than basic common sense, and a general plea of misrepresentation is sufficient in the circumstances.
Proposed Transfer of Assurance Business between Irish Life Assurance plc and Royal Liver Assurance Ltd. [2002] IEHC 18
“7. Finally, I turn to the complaints of Irish Life employees, contained both in the Affidavits placed before the Court and in concerns expressed in Court both by Counsel on behalf of those employees who were represented and by individual employees who spoke themselves.
38. Before doing so, it is only appropriate to say that the extent to which employee concerns can affect the exercise of the Court’s discretion in an application of this nature is necessarily limited. The statutory framework for the transfer of assurance business requires only consultation with policyholders, although on the hearing of the petition, the Court may hear the Directors and “other persons whom it considers entitled to be heard”. The protection afforded to employees under the European Communities (Safeguarding of Employees Rights on Transfer of Undertakings) Regulations, 1980 provides for a separate regime for informing representatives of employees affected by a transfer of the matters set out at Article 7 of the Regulations. To that extent, the Court must obviously have regard to the Regulations because a substantial or egregious breach of the obligations therein contained would inevitably influence the Court in the exercise of its discretion. The essential requirements are for the giving of information to unions and staff about the reasons for the transfer, the implications of same for employees and the measures envisaged in relation to employees in good time before the transfer is carried out. It is not a requirement of the Regulations that negotiations on the working conditions of each and every employee who is affected by the transfer take place and be resolved to that employee’s satisfaction before the obligation under the Regulations is discharged. Still less can this Court be the adjudicator or arbitrator of ongoing grievances or disputes between management and staff arising from likely changes to work conditions in the context of a transfer. The Regulations themselves expressly envisage that economic, technical and organisational aspects of transfers may entail changes in the workplace, up to and including dismissals and do not prohibit dismissals thus arising. As the historical analysis shows, the role of the Court in applications of this nature derives more from the fact that policyholders had in the past suffered significantly through the absence of effective Regulation. It is unfortunately the case, as pointed out by Mr. Gallagher, that one aspect of the transfer of a business is that employees, or some of them, are affected to a greater or lesser degree. It seems to me, however, that the Court, if otherwise satisfied to approve a scheme, should only withhold its approval if there has been a substantial or egregious breach of the Transfer of Undertakings Regulations, or if satisfied that the disruption to the employees of an undertaking is so severe in its implication as to cast in doubt the conclusions of the independent actuary.
39. I propose to summarise the Affidavits of William Parsons, Ian Judd and Adrienne Rynne, whose complaints are more or less representative of all those employees who have expressed concern or raised objections.
40. All three employees are home service representatives and union members who have been on sick leave and are in receipt of permanent health insurance payments under the Employees Scheme with Irish Life. They claim they were given no notice of any kind of intended transfer of home service aspects of Irish Life until the 12th February, 2002 and only received formal details of the proposed transfer and materials relating to it on Friday 15th February, 2002. Mr. Parsons and Mr. Jedd attended a meeting with an Irish Life representative on that date. Mr. Rynne was not present and contends he never received clarification as to how any change would affect the terms and conditions of his employment. However, all three employees did on the 12th February, 2002 receive a letter from Mr. Sean Brennan, Human Resources Manager of Irish Life, dated 31st January 2002 setting out the implications for home service representatives. In short, they had the option of remaining as employees of Irish Life or transferring to Royal Liver as home service representatives. Their Irish Life benefit would continue while they remained unfit to work. If, however, they returned to work after the completion of sale then the position would be (a) where an option had been expressed to remain as an employee of Irish Life, it would not be possible to return to the employee’s previous role as home service representatives would no longer exist in Irish Life and it would be necessary to accommodate the employee in a suitable alternative role or (b) where the employee opted to transfer to RLA, the employee’s role as home service representative would then “be discussed with you by Royal Liver”.
41. All three employees regarded this as totally unsatisfactory, providing no adequate notice or opportunity to consider the proposals and the radical changes in their conditions of employment. Similar concerns were expressed by other employees, being either home representatives or other grades who saw themselves as being affected by the consequences of the proposed transfer. It is only proper to record that a real sense of grievance was manifest in contributions made by individual objectors in Court which was all the more telling for the restrained manner in which those concerns were expressed. In some instances employees had endured muggings and violent assaults over their lengthy service with Irish Life in the course of their collecting duties only now to find they were being confronted with unpalatable choices with, as they saw it, very little time or information in which to make an informed decision as to their future.
42. In a further Affidavit sworn by Sean Brennan on the 21st February 2002, Mr. Brennan explains that there are two trade unions representing employees who will be affected by the transfer, namely MSF and SIPTU. MSF represent 97 employees, SIPTU represents 16 employees. The remaining 77 employees are not affiliated with a union. He deposes that as far back as June 2001, Irish Life and RLA announced they were in talks concerning the potential transfer of the Industrial Branch business. In that same month, letters were sent by Irish Life to both unions regarding the talks entered into with RLA and there were meetings with the MSF union in August and September, 2001 where the Industrial Branch business was discussed. In July, 2001 a letter was sent to all home service representatives regarding a retention payment to be made to transferring staff who met certain performance criteria. Further meetings with both unions took place in October 2001 where again the Industrial Branch business was discussed. On the 6th December 2001 a memo was sent to all affected grades of staff, announcing the sale of the Industrial Branch business and the agreement that was reached that day between Irish Life and RLA. On the same date, a letter was sent to MSF detailing the communication which had been sent to the employees. A further notice was sent to all home service employees on the 18th December 2001 regarding forthcoming communications and following this on 9 and 10 January 2002 a presentation was made to the home service representatives regarding the proposed sale. On 10 January 2002 a meeting was held at the MSF union at which representatives of RLA were also present and following that a further meeting took place on 15 January again with the MSF union and members from RLA and on the same date a letter was sent to the MSF union by Irish Life. Following further union meetings, another presentation was made to the relevant grades at the end of January which concentrated on pension entitlements and any other queries. On the 31st January 2002 a letter of offer was sent out from RLA to the MSF union regarding the transfer and details of this offer from RLA to the various grades was sent out on 4th February 2002. On the 6th February 2002 the MSF union voted to accept the terms of offer set out in the letter of the 31st of January 2002.
43. In early February 2002 a letter was sent out to all home representatives who were absent from work on PHI regarding their entitlements under the Transfer of Undertaking Regulations and on the 7th February 2002 a similar letter was sent to personal financial advisors, who were also absent on PHI. On 13th February, 2002 a letter was sent to the home service representatives who were then on PHI giving details of RLA’s terms and conditions and the retention payment details. This retention payment to be made to transferring staff had been first notified to home service representatives in July 2001.
44. In addition to all these communications and meetings, there were monthly management meetings with employees at which the potential sale of the Industrial Branch business was discussed.
45. Essentially, therefore, insofar as home service representatives are concerned they are transferring to RLA in the same capacity. However, a voluntary early retirement scheme for that grade for those with over thirty years of service has been made available. Irish Life has also presented a number of options to the personal financial advisors category, offering a choice of three options in respect of which the option period for decision has been extended to 26th February, 2002 at the request of the unions.
46. In an earlier Affidavit Mr. Brennan deposes that at the meeting of the 15th February 2002, he went through the terms and conditions on offer from RLA in detail with both Mr. Judd and Mr. Parsons and answered questions in relation to salary and other terms and conditions and went through the presentation given to all active employees in mid January to early February 2002 in relation to RLA, their structure and the structure of the business going forward.
47. I realise that this extremely brief summary of employee dissatisfaction does not do justice to every detail of the various grievances expressed. However, the Court can only approach the matter by reference to the general principles appropriate to an application of this nature and by reference to the considerations which seem to me applicable in the context of the Transfer of Undertaking Regulations.
48. I am satisfied that, broadly speaking, Irish Life has complied with the requirements of the Regulations. To put it another way, no substantial or egregious breach of those Regulations has been established on the material placed before the Court which would justify the Court in holding that Irish Life had disregarded its obligations under those Regulations.
49. It may be, though I am not making any positive finding to this effect, that certain employees who were absent from work on sick leave received only at a late stage the detailed information which was available to active employees through their unions and place of work at all material times. Even if some lapses of this nature did occur, and I stress I am making no positive findings to that effect, they related to a small number of employees only and could not by any stretch of the imagination be regarded as constituting a significant breach of a transferor’s obligations under the Transfer of Undertaking Regulations, such as would warrant this Court in withholding its approval for the proposed Scheme. Still less do these complaints and objections go to the conclusions expressed by the independent actuary in his report, nor do they affect his conclusions in any way.
50. While I did defer further consideration of this application until the 25th February 2002, both to clarify the position regarding the policyholders fund and the attitude of SIPTU, I have concluded that the latter consideration is not something I should take into account in reaching any decision for the reasons already stated. I note however that SIPTU has referred to the Labour Relations Commission a dispute concerning certain implications for employees of the transfer.
51. By further correspondence exhibited in the Affidavit of Mr. Mark Traynor sworn on the 25th February 2002, I have also been made aware that, insofar as SIPTU is concerned, there is no agreement between Irish Life and SIPTU on the issue of the proposed transfer of home service representatives to RLA. Mr. John Swift, Branch Secretary, in a letter dated 22nd February, 2002 records that he represents both home service representatives and personal financial advisors who are employees of Irish Life and certifies that no negotiations on the proposed transfer took place between SIPTU and Irish Life. In his letter he states that at a General Meeting of SIPTU’s Irish Life home service representative members held on the 21st February 2002, Irish Life’s proposal in relation to the transfer of home service representatives to RLA were overwhelmingly rejected. A decision to take industrial action was also taken on that date. These developments convince me that the Court, in exercising its discretion, should not trespass into the arena of industrial relations and confirm me in my view that the only relevant considerations from the point of view of this particular application are those set out above.
52. No evidence has been offered to challenge the findings and conclusions of the independent actuary whose report and conclusions I accept in full.
53. While it is only natural to feel a measure of sympathy for employees whose association as home service representatives with Irish Life extends back over many years in what might be described as a traditional role as collectors, at the end of the day my decision and conclusion must be that no sufficient objection has been made out in this case. I would stress, as has been pointed out several times during the hearing before this Court, that all legal rights and entitlements of the affected employees are preserved in the context of the proposed transfer and I have already referred to the different rights available to employees under the Transfer of Undertaking Regulations as amended.
54. I will therefore sanction the arrangements set out in the Scheme for the proposed transfer in accordance with section 13 of the Assurance Companies Act, 1909.”