When giving Employee Liability Information to a transferee pursuant to reg 11 of TUPE, a transferor incorrectly stated that a Christmas bonus was non-contractual, when it turned out it was contractual. Was this a breach of reg 11, giving rise to a compensation claim?
No, held the EAT in Born London Limited v Spire Production Services Limited.
Born took over a contract from Spire to print Sotheby's catalogues. Before the transfer, Spire provided Born with Employee Liability Information. Spire provided details of the employees' Christmas bonus, an stated that it was 'non-contractual'. Born contended that, because the bonus was contractual in nature, Spire had given incorrect Employee Liability Information and Born should be compensated for this misstatement under reg 12 of TUPE.
The employment tribunal concluded that Born's claim had no reasonable prospect of success. For, even assuming the bonus was contractual, all regulation 11 had required Spire to do was to provide particulars of employment as defined by section 1 of the Employment Rights Act 1996. This did not require Spire to state whether or not remuneration was contractual.
The EAT agreed. Section 1 of the ERA 1996 sets out the requirements on employers in respect of a statement of employment particulars. Those particulars were not to be read as limited to contractual terms and conditions. But there was no obligation to state whether the particulars were contractual or not. Saying that the bonus was non-contractual went further than the particulars required to be provided for reg 11 purposes. There was therefore no breach of reg 11.
In cases like this it is up to the transferee to undertake more due diligence on whether employee remuneration is contractual or not. And had this been a case where the transferee enjoyed well drafted warranties and indemnities from the transferor, a claim against the transferor might have arisen accordingly. But in service provision change cases these are usually non-existent.
Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary.