TUPE duty to inform breached by administrators

Four managers who lost their jobs after a home shopping company collapsed have won about £190,000 in total in damages – partly because the administrators fell foul of the TUPE duty to inform.

They worked for Health & Home Shopping (HHS), Salford, which went into administration in October 2007 after it was hit by a run of postal strikes. There were many bidders for the assets but eventually Express Gifts, part of Yorkshire home shopping company Findel, was left as the sole bidder. Administrators from Deloitte handled the sale.

Express Gifts had made it clear, said the judgment, that it only wanted to acquire HHS’s assets, and not its liabilities: “In particular any liabilities in respect of the employees of the company. Any such sale should not be treated as a transfer of undertaking and the TUPE regulations will not apply.”

But a pre-hearing in January found that all HHS staff, together with employment liabilities, had transferred to Express Gifts under TUPE. This included the four managers.

The Employment Tribunal recently found that former HHS chief executive Francis Marra was dismissed unfairly and wrongfully, but was not entitled to a protective award under TUPE. His damages came to about £80,000.

Marra was dismissed about three weeks before the transfer by the administrators.

The other three managers were awarded damages on various grounds, but all included a protective award under TUPE 2006.

The tribunal ruled that the administrators had a duty to inform HHS employees of the transfer three days before it went through on 22November 2007. They did not inform affected staff until 23 November. “In those circumstances there was on the face of it a breach [of TUPE]”, said the judgment.

The four managers were represented by Berg Legal, Manchester. Joseph Sutton, solicitor, who worked on the case, said the question of when the duty to inform is triggered is “significant” because “there’s so little on it” in the regulations.

“There is very little case law on the question of precisely when the duty to inform is triggered,” added Sutton. “Tribunals tend simply to repeat the mantra ‘in good time before the transfer’. The judge held that the duty to inform under TUPE arose three days before the transfer ‘at the latest’, and even before any deal was formally signed, since it was obvious ‘that the overwhelming likelihood was that Express Gifts would become the transferee of the business whose assets it was acquiring’.

“The principle is that there does not need to be a concluded deal or fixed prospective transfer date for the duty to inform to arise. It would seem sufficient for there to be an ‘overwhelming likelihood’ that a transfer will take place.”

Some 60 other claimants also brought various claims against Express Gifts, the administrators and others, though many did not pursue them at tribunal. Most had no legal representation, but Sutton said he believed the total amount of damages they were awarded ran into six figures.

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