Royal Mail Group Ltd v Communication Workers Union [2009] EWCA Civ 1045 CA

transfer of undertakings | informing and consulting | mistaken belief in legal position

The Court of Appeal has held that an employer that does not inform and consult with employees who are transferring under TUPE because of a mistaken belief in the legal position will not automatically be in breach of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246).

Royal Mail Group Ltd transferred certain Post Office businesses to WH Smith. The Communication Workers Union argued that employees' contracts would be automatically transferred to WH Smith and that, before the transfer, Royal Mail Group Ltd would be required under reg.13 to provide information to the employees' representatives. This included providing information on "the legal, economic and social implications of the transfer for any affected employees". Royal Mail Group Ltd took the view that its contractual arrangements with its employees meant that no automatic transfer would take place under reg.4.

An employment tribunal concluded that Royal Mail Group Ltd did not genuinely believe that there would be no automatic transfer. Therefore, it had failed properly to inform and consult the Communication Workers Union and was in breach of reg.13. The EAT disagreed, holding that Royal Mail Group Ltd was mistaken in its belief that TUPE did not apply, but that this did not mean that its belief was not genuine. The EAT then had to decide if a genuine (albeit mistaken) belief as to the legal implications is sufficient for compliance, or if there is an obligation to get the position in law right whatever the subjective view of the employer. The EAT held that, if the intention had been that the employer has to warrant the legal accuracy of the information that it is providing, TUPE would have been worded to say this.

The Court of Appeal agreed with the EAT. It held that, while it is a powerful argument that employees need to know where they are and it is for the employer to know what the legal implications of a transfer are, it does not follow that the employer must warrant the accuracy of its views on the legal position. TUPE is intended to allow proper debate, with the employer able to say that the implications of a transfer are not clear. However, the employer is obliged to consider the legal implications and failure to do so will mean that it is unable to defend its view of the legal implications as genuine, which could result in a penalty being imposed under reg.15.

Case transcript of Royal Mail Group Ltd v Communication Workers Union (on the BAILII website)

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