Sweetin v Coral Racing

Sweetin v Coral Racing
Employment Appeal Tribunal

TUPE: compensation for failure to consult

Ms Sweetin worked for Toals, a bookmaker, at its shop in Stranraer, Scotland. Under her contract of employment, she was employed as a clerk, but she occasionally performed deputy manager duties when the manager was absent. On 29 September 2003, the Toals business where Sweetin worked was transferred to Coral Racing.

After the transfer, a number of meetings took place between Sweetin and Coral Racing’s representatives at which the post of deputy manager was discussed. Sweetin was not told that she could not be deputy manager, but assumed this was the case.

On 19 November 2003, Sweetin pointed out, for the first time, that she considered herself to have been deputy manager when Toals had been running the business, and this was subsequently confirmed (in writing) by Toals.

The next day, a representative of Coral Racing went to see Sweetin, but she had been certified as unfit for work. She never returned and by letter dated 3 December 2003 she resigned, stating she had lost all trust and confidence in Coral Racing’s management.

Duty to inform

Sweetin claimed constructive unfair dismissal, sex discrimination and a failure to comply with Regulation 10 of TUPE in respect of the duty to inform and consult representatives before a TUPE transfer.

The tribunal dismissed her unfair constructive dismissal and sex discrimination claims, but held that Coral Racing had failed to inform and consult as required by TUPE.

They made an award of six weeks’ pay in respect of that failure. Sweetin appealed to the EAT against the limiting of the compensation to only
six weeks’ pay.

The EAT held that tribunals should adopt the same approach to assessing compensation for a failure to consult under TUPE 1981 Regulations that they adopt when assessing the amount of a protective award for failure to consult under the collective redundancy consultation provisions in section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992.

Compensation in such cases is punitive rather than compensatory.

Key points

Compensation for failure to inform and consult on a TUPE transfer is intended to punish the employer for its default and should be at the maximum level of 13 weeks’ pay per employee unless there are mitigating circumstances.

Tribunals must follow the guidelines in Susie Radin v GMB and others. Where there has been no consultation at all, the proper approach is to start with the maximum amount of 13 times a week’s pay for each employee (as compensation for failure to consult under TUPE) and then reduce it by such amount as the tribunal considers “just and equitable”.

The EAT also ruled that actual loss suffered by an employee can be taken into account.

What you should do

Be aware that while the failure to consult in redundancy cases appears more serious (no job) than in a TUPE transfer (job secure), the legislation treats both equally seriously. Mistakes in either arena are likely to prove costly.

Appreciate the significance of this case for transferors. While currently the liability for a transferor’s failure to consult transfers under TUPE (the 1981 Regulations) to the transferee, the position changes from 6 April under the new TUPE (the 2006 Regulations). From this date, the transferor and transferee may be held jointly liable to pay any award of compensation for a failure by the transferor to comply with its information and consultation requirements.

Check carefully the indemnities and warranties in any transfer agreement to ensure they deal adequately with the risk of liability for failing to consult.