TUPE - breaches and compensation

Employers have welcomed the recent decision of Shields Automotive Ltd v Langdon where the Employment Appeal Tribunal (EAT) reduced the compensation awarded for a mere technical breach of the information and consultation provisions of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). It was accepted that the employer had rushed the process and made a unilateral decision to select one of the representatives where the election had resulted in a tie-break. However, the EAT considered that the employer had generally sought to comply with their TUPE obligations. No criticism was made of the quality or content of the consultation so the award of seven weeks' pay was not justified and accordingly was reduced. The case sets a precedent for employers to argue for a reduced punitive award where they have tried to comply with their TUPE obligations but made technical mistakes.

What does TUPE require?

Under TUPE the transferor and transferee have an obligation to inform and consult with recognised trade unions or elected employee representatives in relation to any affected employees.

Affected employees

The obligation to inform and consult is in relation to any employee affected by the transfer, whether they are employees of the transferor or the transferee.

Appropriate representatives

The obligation to inform and consult relates to the "appropriate representatives" of affected employees. Where an employer recognises a trade union, it must inform and consult representatives of that union. The employer is not required to inform and consult any other employee representatives in such circumstances, but may do so if the trade union is recognised for one group but not for another.

Where no trade union is recognised, appropriate representatives are either existing employee representatives or new ones specially elected for the purposes of the transfer.

Election of employee representatives

If either the transferor or transferee does not recognise a trade union or have appropriate elected employee representatives already in place, they will need to hold elections for appropriate representatives before the consultation process can begin. 


The employer must inform the appropriate representatives of the information set out below long enough before the relevant transfer to enable the employer of any affected employees to consult the appropriate representatives of any affected employees. 

What information is to be given?

  • The fact of the transfer, the date (or proposed date) when it is to take place and the reasons for it.
  • The legal, economic and social implications of the transfer for the affected employees.
  • The measures (for example, redundancies) which the employer envisages it will take in connection with the transfer in relation to any affected employees or, if no measures are to be taken, that fact.
  • The transferor must also provide information about any measures that the transferee envisages it will take in relation to the transferring employees in connection with the transfer or, if the transferee envisages taking no measures, that fact.

The obligation to consult with a view to seeking agreement

An employer of an affected employee who envisages taking measures in relation to an affected employee, in connection with the relevant transfer, must consult the representatives of that employee with a view to seeking agreement to the intended measures. In practice, this means that the employer must negotiate in good faith over all areas of the proposed redundancies or the measures it intends to take over the TUPE transfer.

The penalty for failing to inform and consult

In the event of a failure to inform or consult TUPE enables the employment tribunal to make a protective award to every affected employee of up to 90 days gross pay. A claim for such an award must be brought by the appropriate representative within 3 months of the last of the dismissals to which the claim relates.

The purpose of this award is punitive, rather than compensatory and employment tribunals tend to follow the guidelines suggested by the Court of Appeal in GMB v Susie Radin Ltd [2004] (the "Susie Radin Guidelines").

These guidelines provide that, in deciding in the exercise of their discretion whether to make a protective award and for what period, an employment tribunal should have the following matters in mind:

  1. That the purpose of the award is to provide a sanction for breach by the employer of the obligations under TUPE: it is not to compensate the employees for loss which they have suffered in consequence of the breach.
  2. The employment tribunal has a wide discretion to do what is just and equitable in all the circumstances but the focus should be on the seriousness of the employer's default.
  3. The default may vary in seriousness from the technical to a complete failure to provide any of the required information and to consult.
  4. The deliberateness of the failure may be relevant, as may the availability to the employer of legal advice about his obligations under TUPE.
  5. How the employment tribunal assesses the length of the protected period is a matter for them but a proper approach in a case where there has been no consultation is to start with the maximum period and reduce it only if there are mitigating circumstances justifying a reduction to an extent which the employment tribunal consider appropriate.

In Newage Transmission Ltd v Transport and General Workers Union and others the EAT held that a 90 day maximum protective award could be appropriate even where the employer's breach related to a 30 day consultation period. This reinforced that the relevant issue is the seriousness of the employer's breach and not the loss suffered by the employees.

Unison v Leicestershire County Council [2006] EWCA Civ 825confirmed that employment tribunals may also take account of any failure by employee representatives to engage in consultation, when determining the amount of any protective award.

In National Coal Mining v NUM UKEAT/0397/06/RN the employer unsuccessfully argued on appeal that the maximum award was only permissible in cases of a blatant refusal to consult at all. The EAT ruled that ordinarily an employment tribunal should award less than a maximum protective award where the employer undertakes "more than minimal" consultation.

The recent decision of Shields Automotive Ltd v Langdon provides further clarification in this regard that an award at the higher end of the spectrum will not be appropriate in circumstances where there has been a mere technical breach that did not affect the substance of the consultation.


This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.