Shields Automotive Ltd v Langdon & Anor (Transfer of Undertakings : Consultation and other information)

Under Transfer of Undertakings (Protection of Employment) Regulations 2006, the fairness required by Regulation 14 concerns the election process itself, not whether subsequent consultation was effective. An employer must make reasonably practicable arrangements which ordinarily give every entitled affected employee a proper opportunity to vote. If an employer relies on practical constraints, it must establish them.

Employee representatives must be appointed or elected by affected employees. An employer cannot resolve a tied election by selecting a candidate itself. A protective award for breach is punitive, not compensatory. Its amount turns on the seriousness of the employer’s default, and an appellate tribunal may intervene only where it is manifestly excessive.

Following the transfer of a motor-vehicle dealership, Shields Automotive Ltd invited affected employees to elect representatives for consultation under TUPE. The election was announced at 2 pm and closed at 5 pm on the same day. One employee was absent on a scheduled day off and could not vote. A tie for a representative position was resolved by a manager without informing the employees or permitting them to decide it.

The Employment Tribunal upheld claims by Mr Langdon and Mr Brolly for breaches of Regulations 13 and 14. It awarded two weeks’ pay to Mr Langdon and seven weeks’ pay to Mr Brolly. Shields appealed on liability and quantum. The central issues were whether the Tribunal’s findings of an unfair election were perverse and whether the awards had been assessed on the correct basis.

1. Appeal allowed in part. The appeal against liability was dismissed. The award to Mr Langdon remained undisturbed. The award to Mr Brolly was reduced from seven weeks’ pay to three weeks’ pay.
2. Regulation 14 required examination of the election, rather than the overall adequacy of subsequent consultation. The employer had the duty to make arrangements which were reasonably practicable to ensure a fair election. Although the provision did not guarantee that every employee would be able to vote in every circumstance, employees entitled to vote should ordinarily have a proper opportunity to do so. Where an employer asserted that a longer process was not reasonably practicable, it had to establish the relevant circumstances. The Tribunal was entitled to find unfairness where no reason was shown for excluding an employee who would have returned the following morning.
3. The employer’s unilateral selection between tied candidates also breached the statutory requirement that representatives be appointed or elected by affected employees. It was open to the Tribunal to find that this impaired the fairness and democratic authority of the election, even if the breach could be characterised as technical.
4. A protective award for breach of Regulations 13 and 14 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 is a sanction, not compensation for individual loss. The central consideration is the seriousness of the employer’s default. The Employment Tribunal erred by differentiating the awards according to the individual effect of the failures and by awarding Mr Brolly the same seven-week period as in the more serious circumstances of Todd v Strain, [2011] IRLR 11.
5. The employer had sought legal advice, acted without malice and substantially consulted employees, though not wholly through properly elected representatives. Its failures therefore fell towards the technical end of the scale. Three weeks’ pay was the appropriate punitive award for Mr Brolly. There was no cross-appeal concerning Mr Langdon, and his two-week award was not manifestly excessive.

• Employment Appeal Tribunal: Allowed the employer’s appeal only as to the amount awarded to Mr Brolly; substituted an award of three weeks’ pay.
• Employment Tribunal, Glasgow: In reasons delivered on 8 November 2012, upheld both employees’ complaints under Regulations 13 and 14 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 and awarded two weeks’ pay to Mr Langdon and seven weeks’ pay to Mr Brolly.