Why you must consult
Before a TUPE transfer, by law both the old and new employers must inform and consult with a recognised trade union or employee representatives.
'Inform' is when you tell your affected employees or their representatives the facts about the transfer.
'Consult' is when you talk and listen to affected employees or their representatives on expected 'measures' and genuinely consider their views. Measures are changes that could affect employees.
Employee representatives speak on behalf of staff. If you do not have an existing arrangement for representatives for TUPE consultation, you will need to hold an election process.
If you have a recognised trade union to represent the affected staff, you must inform and consult through the union.
Informing and consulting is a legal obligation. It can also:
- reduce stress and uncertainty for employees
- help you identify potential problems early on
- make the transfer smoother
If you do not inform and consult
By law, both the old and new employers must inform and consult during a TUPE transfer.
If you fail to inform or consult, you may be jointly or individually liable and could be taken to an employment tribunal by:
- the affected employees
- any recognised trade union
You will have failed to inform and consult if:
- there is a recognised trade union and you did not consult its representatives
- there is no recognised trade union and you failed to arrange an election of employee representatives to consult with
- you did not genuinely and meaningfully consult with employee representatives
- you have fewer than 10 employees and you did not consult them directly or their appropriate representatives
Who pays compensation
If an employee's or trade union's claim at an employment tribunal is successful, either employer could have to pay a penalty, even if it was the other employer who failed to consult properly.
The penalty is up to 13 weeks' gross uncapped pay for each affected employee.
Employers should get agreement (an 'indemnity') from the other employer in the transfer plan to pay for potential costs caused by their failure to consult.