Settlements and information and consultation obligations

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Prior to a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) an employer must inform and consult with its employees. In proceedings for failing to comply a transferor may raise the defence that the transferee did not provide the necessary information. In the case of Clark v Middleton and anor the issues were whether a settlement could prevent compensation being awarded where the fault lay with the transferee and if a failure to identify the correct name of the transferee could be treated as just a technical breach that could result in zero or nominal compensation.


Ms Clark worked for Black Dog Hydrotherapy a small business run by Mrs Middleton which offered hydrotherapy treatment for injured dogs. Mrs Slade-Andrews, another of the employees, had agreed to buy the business. She set up a limited company “Black Dog” for this purpose. Ms Clark transferred to the new business but subsequently refused to agree to new contractual terms and resigned. She brought claims against Mrs Middleton for failing to adequately consult and claims against Black Dog for unfair dismissal and outstanding wages which she settled prior to the hearing.


There had been a failure to inform and consult about the transfer. However, the transferor established the reason was that the transferee had not provided the necessary information. In these circumstances the transferee was liable, but the settlement reached between the claimant and transferee was found to be wide enough to cover this too even if it was not a claim brought against the transferee. Separately the liability for failure to identify “Black Dog” as the transferee remained with Mrs Middleton and as that was not just a technical breach zero compensation for that failing was inappropriate.

Key points

The duty to inform and consult prior to the transfer means that it will be the responsibility of the transferor. When facing a claim for failing to comply employers should be aware that there is a statutory defence available where the transferee has not provided the necessary information. The potential to recover compensation from the transferee in this type of situation despite not being able to claim directly against it should be taken into account by claimants when considering the effect of entering into a settlement agreement which dismisses all proceedings.

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