Employers could face significant unanticipated penalties under TUPE and collective redundancy legislation as a result of the Agency Workers Regulations 2010 (AWR) which came into force on 1 October 2011.

The AWR adds to the list of mandatory information to be provided to employee representatives under TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006) and collective redundancy legislation (s.188 of TULR(C)A 1992). From 1 October 2011, the AWR requires that employee representatives also be given information about the use of agency workers by the transferor including:

• the number of agency workers working temporarily for and under the supervision and direction of the employer;
• the parts of the employer’s undertaking in which those agency workers are working;
• the type of work those agency workers are carrying out.

The requirement is extensive since information is required in respect of all agency workers working “temporarily for and under the supervision and direction” of the employer. Under TUPE, the employer is the employer of any affected employees which is widely defined to include not just transferring employees but also those affected by the transfer, or those who may be affected by measures taken in connection with it. Hence, if only part of a business is transferred, it is not only necessary to provide information about agency workers working in the relevant part but also those working in all other parts of the employer’s business, provided they are under the supervision of the transferor. Agency workers working temporarily in the business or part that is transferred will not, however, transfer along with the employees of the transferor who are wholly or mainly assigned to the business. Nor does TUPE give them the right to participate in the election of the employee representatives.

However, a failure to comply with this new requirement could result in the employer receiving a punitive award of compensation of up to 13 weeks’ actual pay per affected employee under TUPE and 90 days’ actual pay per affected employee under the collective redundancy legislation.

The AWR makes no allowance for employers who had already complied with their TUPE/S.188 obligations prior to the additional requirements of the AWR coming into force on 1 October 2011. It follows that an employer risks incurring such penalties unless they comply with these extended requirements to provide information prior to the TUPE transfer or the collective redundancies taking effect. Further, to comply with the AWR it would be prudent for an employer to update the information provided to employee representatives if the number of agency workers fluctuates prior to the transfer date (in the case of TUPE transfers), or the date the redundancy dismissal take effect (for collective redundancy dismissals).

For further information, contact Ruth Bonino or any member of the Reed Smith employment team with whom you normally deal.