In this case one company acquired another under Tupe. The employees of ISG (the transferor) were not advised that under TUPE 2006 they had the right to object to being employed by New ISG(transferee). The only problem is, what if you only find out after your name has been added to the new company's payroll, that it is the one company you loathe and detest and wouldn't want to be seen dead working in? Doesn't really sound fair for an employee to find himself in that position.
Most likely the employees of ISG did not feel this way about UKRS the new owner of ISG, but one of the employees, Mr McMullin said he regarded them as a small player with very limited financial backing, and another, a Mr Harvey said that he 'would not work for UKRS in any circumstances'. Whatever the workers were feeling, ISG and UKRS obviously took the position that workers should not be encouraged to dwell on the matter too long, or at all, especially before the transfer had taken place. On hearing that UKRS had bought the company a number of employees decided to resign.
It seems that before quietly leaving the company, one or more of the said employees returned to the office at 10:30pm to tidy their desk and put out the milk bottles.
Coincidentally certain files containing names of contacts in the rail industry also went astray; others wended their merry way over the internet into the possession of another soon to be ex-employee, and for good measure a number of files were alleged by New ISG to have been deleted from the company's computers and mobile phones.
There were also rumours (possibly unfounded) in the office that prior to leaving, one of the employees had been exercising her photocopying skills. 200-300 sheets later, psychologists' recommendations regarding the 'overlearning' of skills seem to have been fairly satisfied. The results were neatly tidied away. Out of sight ......and out of the office.
Whatever the ins and outs of the story, ISG took out an injunction against its former workers to enforce covenants preventing the use of any filched information.
It seems that the entrepreneurial workers were found to have been consorting with a competing business ESS Rail Recruitment Limited ("ESS"), a competitor of New ISG. A number of confidential documents were also disclosed by one of the ex-employees(Respondents). They had been stored at ESS. During their time at ESS all of the Respondents canvassed, solicited or dealt with a variety of clients or temporary workers of New ISG. ESS had taken on the ex ISG employees.
Temporary injunctions preventing the use of information gained, and for the return of files taken, were granted by the court and complied with by the workers.
The bone of contention was the interpretation of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006).The workers of ISG argued that they had objected within the meaning of regulation 4(7) so that they never became employees of New ISG. According to that argument, New ISG could not enforce the restrictive covenants in the contract.
New ISG was keen to make the injunction of the court permanent, to enforce the covenants that were incorporated into the New ISG's contract, that of a 12 month cooling off period, whereby information or contacts gained as a result of working at ISG or the new brand of ISG could not be disclosed to any third parties or used.
In order to do this New ISG had to convince a court that the workers had indeed transferred under TUPE to the new company, and that the new covenants were thus incorporated into their contracts.
In rejecting New ISG's requests the judge found a number of breaches by ISG and the Joint Administrators of the requirements of regulation 13(2). The judge noted that there was a "flagrant disregard of the obligation and to make matters worse the information provided was inaccurate." . There was a failure to: a) inform "appropriate representatives", b)to give employees the date of the transfer as required by regulation 13(2)(a c) identify the transferee d) inform employees accurately of the legal implications of the transfer.
The judgement held that "that Parliament provided that an objector could give notice either to the transferor or to the transferee. If the objector, through concealment, found himself employed by the transferee before he could raise an objection, then it seems to us that the moment he discovered what had happened and that his employer was not the transferor but the transferee, he could leave his employment without liability; at the least, the parties to the transfer would be estopped from denying that the employee had exercised his right to object timeously. Further, it may well be the case that it would be a breach of the employers' duty of good faith to employees to conceal from them a transfer which has taken place."
The judge invoked the use of the ancient judicial prerogative of estoppel (whereby there shall not be a wrong that is without remedy)." New ISG are seeking to take advantage of a wrong for which they are jointly liable and of which they had full knowledge at the time of the transfer. I do not see why the Court should not prevent this from happening."
Mr Pester for New ISG argued that on the sale of a business the goodwill will include any restrictive covenants transferring to the new owner. The only problem was that as New ISG had defaulted on payments, the business had technically reverted to its original owner. There could be no transfer of a right to the covenants, as there was at least as far as the goodwill was concerned no sale!
In closing, Judge Behrens argued that granting an interim injunction to New ISG would mean that the respondents could not use their old contacts. This would lead to them losing their jobs. " None of the Respondents are earning substantial sums of money and it seems to me that in those circumstances it is particularly important to be careful before a court interferes with their right to earn a living".
Part 1 can be found: Here
© Workrep 08 / 12 / 2007