Transferor Ordered to Pay £65,500 to Transferee for Failing to Provide Employee Liability Information

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Posted on 18 Nov 2014

A transferor has been ordered to pay a transferee compensation of £65,500 after it failed to provide it with information about potential claims from transferring employees. 

In Eville & Jones (UK) Ltd v Grants Veterinary Services, Eville inherited Grants’ employees under TUPE following a service provision change. In the period leading up to the transfer, Grants was in severe financial difficulties. It was served with a winding up petition by HMRC, gave notice of its intention to appoint an administrator and informed employees that there would be a delay in paying their March salaries. In fact, the March salaries were never paid. 

The TUPE transfer took place on 2 April, meaning that Grants was required to provide employee liability information by 19 March. Required information includes information about any claims the transferor has reasonable grounds to believe an employee might bring. Grants did not provide any information about potential claims for unpaid wages and Eville issued a claim in the employment tribunal for breach of the employee liability provisions.

The employment tribunal upheld its claim and awarded compensation of £65,500, representing the minimum award of £500 per employee in respect of whom information was not provided . The tribunal considered that Grants was fully aware of its financial situation and of the fact that salaries would not be paid. Claims against Eville for unpaid salary would have been in the reasonable contemplation of Grants by the deadline for providing employee liability information. There were no special circumstances which excused its failure to provide the information.

The tribunal noted that compensation has to be assessed by reference to loss arising from the failure and must be a minimum of £500 per employee, unless it is just and equitable to award less. It considered that there was no basis for awarding less than the minimum, as the failure had not been inadvertent or insignificant. The fact that the amount awarded was more than the loss suffered did not matter. 

This case serves as a reminder of the consequences of failing to comply with the obligation to provide employee liability information. The failure can prove very costly, particularly in the case of large scale transfers involving many employees. Transferor employers need to be aware of their obligations and ensure they comply. It is interesting that the employment tribunal awarded a total which exceeded the loss suffered by the transferee as a result of the failure to provide employee liability information. 

Earlier this year a change was made to the obligation to provide employee liability information. The information must now be provided at least 28 days before the transfer instead of the previous 14.

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