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Buyers beware
Alamo Group (Europe) Ltd v Tucker &Twose of Tiverton Ltd, EAT, 24
February 2003
The question of exactly what rights and obligations transfer on a business
sale has evolved in case law since the Transfer of Undertakings (Protection of
Employment) Regulations 1981 (TUPE), as this case demonstrates.
At a Works Council meeting in June 2000, Tucker & Twose told staff it
was in administration and consulted them over a possible management buyout. As
it transpired, however, Alamo bought the business instead and within a few days
of the sale, announced the relocation of the manufacturing operation and 34
redundancies.
Under TUPE, both sellers and purchasers have obligations to inform and
consult affected employees. Regulation 5(2) of TUPE also provides that on sale,
all the rights, powers and obligations of the seller transfer to the purchaser.
The employees brought tribunal claims seeking compensation as a result of
the company’s failure to consult over the transfer to Alamo and the job losses,
and argued that liability for this transferred to Alamo. The tribunal agreed,
notwithstanding that Alamo had carried out a substantial consultation exercise
before effecting the dismissals.
Alamo appealed unsuccessfully. The EAT reiterated that the purpose of TUPE
is to protect employees on a business transfer. Regulation 5 is crucial to that
protection, and the obligations to inform and consult affected staff
(Regulations 10 and 11) are also subject to Regulation 5 and transfer on sale.
This is so even though the failure to consult in this case was not Alamo’s
fault.
The formality of informal warnings
Ferenc-Batchelor and Anor v London Underground Ltd, EAT, 29 October 2002
Workers now have the right to be accompanied at a disciplinary hearing which
is defined (by section 13(4) of the Employment Relations Act 1999) as "a
hearing which could result in the administration of a formal warning, the
confirmation of a warning, or the taking of some other action".
But what about less formal situations? In these conjoined cases, the
applicants received ‘informal’ oral warnings in accordance with London Underground’s
(LU) disciplinary procedure but were not offered the chance to be accompanied
when the issues were discussed.
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As a result, they claimed that the informal warning, subsequently confirmed
in writing and included as part of their disciplinary record, was in reality a
formal warning and fell within the Act. The tribunal agreed, as did the EAT.
There is no right to be accompanied in any hearing resulting in the
administration of an informal warning. An informal warning might signal the
initiation of the formal disciplinary procedure in the future, if there was any
repetition of the behaviour that gave rise to the warning. However, the EAT
found in this case that because a disciplinary warning became part of an
employee’s record under LU procedure, it became a formal warning, and therefore
gave rise to the statutory right to be accompanied.
