I Lab Facilities Ltd v Metcalfe & Ors (Transfer Of Undertakings : Consultation : affected employees)

Employees are not “affected employees” for the purposes of regulation 13 merely because the transfer of one part of an undertaking leaves another part less viable or is accompanied by its closure. The transfer itself must affect them, for example through work which they perform in or for the transferred part.

A complaint for failure to inform and consult under regulation 13 cannot succeed unless a relevant transfer has in fact occurred. The duties must be performed long enough before a proposed transfer, but a failure cannot be established finally where the proposed transfer is abandoned.

The claimants worked principally in the post-production part of an insolvent company’s business. The liquidator transferred only its separate rushes business to the appellant. The post-production business closed and the claimants were dismissed.

The Employment Tribunal held that, although the claimants were not assigned to the transferred business, they were affected employees because an earlier plan had envisaged some post-production work transferring and they were later excluded. It made maximum protective awards under regulation 15 of the Transfer of Undertakings (Protection of Employment) Regulations 2006.

The transferee appealed. The central issue was whether the claimants were affected employees in relation to the transfer which occurred, or to an earlier proposed transfer which was abandoned.

1. Appeal allowed. The claim under regulation 15 was dismissed.

2. The only relevant transfer which occurred was the transfer of the rushes business. The claimants worked in the post-production business, which did not transfer. Their dismissals resulted from the closure of that business, not from the transfer of the rushes business.

3. Under regulation 13(1) of the Transfer of Undertakings (Protection of Employment) Regulations 2006, an indirect consequence of a transfer does not make employees affected employees where the transfer itself has no impact on them. This remains so where the closed part was economically linked to, or subsidised by, the transferred part. The principle is the same whether the activities are separate businesses or separate parts of one undertaking.

4. The Tribunal did not hold that employees who are not assigned to the transferred undertaking can never be affected employees. They may be affected where they undertake work in or for the transferred part and its transfer causes them to lose that work. That differs from a loss caused solely by reduced viability of the remaining part.

5. The earlier proposal that some post-production work might transfer could not sustain the complaint. Regulations 13 to 15 require information and consultation long enough before a transfer, but a breach cannot definitively arise unless a relevant transfer actually takes place. A transferor may still postpone a proposed transfer and comply before it proceeds. As the earlier, wider proposal was abandoned, no complaint could be brought in respect of it.

• Employment Appeal Tribunal: Allowed the transferee’s appeal and dismissed the regulation 15 claim: [2013] UKEAT 0224_12_2504.
• Employment Tribunal, London Central: On a rehearing, upheld the claimants’ complaint under regulation 13 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 and made maximum protective awards. Its written reasons were sent on 14 December 2011.