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Care required when settling TUPE claims

BY Daniel Gorry
Employment Law & HR
BG Purple

Disputes involving the Transfer of Undertakings Regulations (TUPE) can be tricky at the best of times.  Not only are the Regulations themselves notoriously difficult to interpret, the claims will often involve multiple Claimants and more than one Respondent.

It will therefore often come as a relief to all involved when such a case settles prior to a hearing.   However, great care needs to be taken when settling such claims to ensure that all Respondents are covered by any settlement.   A settlement agreement that purports to settle all claims may be effective against one Respondent but not others depending on wording and timing.  

This is the unfortunate scenario faced in by the Respondents in the case of Tamanq v Act Security Ltd.  The case involved a number of claims against three Respondents arising out of a TUPE transfer.  One of those claims was for a failure to consult over the transfer, where all three Respondents would have been jointly liable.  The Claimants entered a settlement agreement with one of the Respondent which included a settlement of the claim for a failure to consult.  The Claimants however elected to continue to continue to pursue the claim against the other two Respondents. 

Could the remaining Respondents use the settlement agreement with one Respondent on the failure to consult to bar that claim continuing against them?  Perhaps understandably, the EAT answered that question in the negative and allowed the claims to proceed.  On a true construction of the settlement agreement, the release only applied to the one Respondent and not the others.  

Great care needs to be taken by employers when settling TUPE related claims, particularly when this is being down via a compromise agreement, and legal advice should always be sought in these circumstances.  

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