Closed shop

The employment appeal tribunal (EAT) has recently reached its decision in the case of Cable Realisations Limited v GMB Northern in which it held that Cable failed to provide information to union representatives in accordance with Regulation 13 (2) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) 'long enough before' the transfer of its business. The EAT's decision took account of Cable's annual shutdown which had taken place immediately before the transfer of the business, during which union representatives were unable to consult with either the management of Cable or the members of the union. The provisions of Regulation 13 (2) of TUPE require an employer to inform, and if appropriate, to consult appointed representatives of any affected employees (eg, union representatives) on issues relating to the business transfer and the impact of these upon affected employees. This includes details of when the transfer is to take place; the reasons for it; and any 'measures' (such as pre- or post-transfer redundancies) which the employer envisages it will take in relation to affected employees. The information must be provided 'long enough before a relevant transfer to enable the employer of any affected employees to consult the appropriate representatives of any affected employees…'. Unhelpfully, no minimum prescribed time limit is set out in TUPE. Consequently, when determining what constitutes 'long enough before a transfer' much will depend upon the extent of any changes which are likely to take place. The facts of this case can be neatly set out in a timeline format:

• 28 June 2007 – Cable decided to sell its business.
• 29 June – Cable posted notices around its site informing the workforce that negotiations were underway to sell the business.
• 3 July – Cable met with representatives from the union.
• 25 July – A meeting took place with the union and representatives from the prospective purchaser.
• 15 August – Cable received a 'measures' letter from the prospective purchaser advising Cable that they did not envisage taking any measures in relation to the transferring employees. On the same day, Cable met with the union representatives and provided the necessary information.
• 17 August – A meeting took place with the union during which Cable answered the union's questions arising from the information provided.
• 20-31 August – Cable's annual shutdown took place during which about 99% of the employees were on holiday and about 85% were away from home.
• 3 September – The transfer of Cable's business completed.

The union brought claims on behalf of its members that Cable had failed to comply with its Regulation 13 requirements to inform and consult. The EAT held that, given that the purpose of providing information is to assist in voluntary consultation prior to the transfer of a business, it had to be possible for consultation to take place when proposals to sell a business were at a formative stage. This meant that adequate time was required for representatives to respond to any information provided, together with adequate time to consider those responses. In this case, to engage fully in a meaningful consultation exercise, the EAT held that it was essential that the union representatives could communicate with their members and speak to Cable's management. This was not practicable as information was only provided to the representatives on 15 August, just days before the annual shutdown which continued until three days before the transfer. It's not possible to discuss in full the extent and effect of the information and consultation obligations under TUPE in this article. However, the Cable v GMB case serves as a useful reminder to employers to ensure they engage fully in any information and consultation exercises, as appropriate, when the transfer of a business is proposed. In particular, it is important for any employer who has an annual shutdown to ensure that this is factored into any timescales. Failure to do so could, as in Cable's case, lead to claims being brought by appropriate representatives on behalf of affected employees – and the maximum award is 13 weeks' pay for each affected employee. In the Cable case, only three weeks' pay was awarded to each affected employee, which is surprisingly low. But all employers – particularly those with large workforces – should be mindful that potential awards could be significant. To reduce potential exposure in this respect, it is important to inform and consult in a timely and meaningful fashion. Louise Burn is an associate at law firm Pinsent Masons. See www.pinsentmasons.com