TUPE and Negligent Misrepresentation
Hagen v ICI Chemicals and Polymers Ltd (2002) highlights the need for employers to ensure that all communications to employees about their employment and pension benefits are accurate.
This case was brought after the transfer of a business and its employees from ICI to RES. The claimants were employed by ICI for specialist engineering work and in 1994 the engineering department in which they worked was transferred to RES. RES agreed to continue the employees' contracts on the same terms and to provide a pension scheme roughly comparable with the ICI scheme. However, the employees were reluctant to accept the prospect of the engineering department being transferred to RES.
The employees claimed that ICI had misrepresented the employment conditions, job security and pension rights they would have with RES. They further claimed that they would have opposed the transfer had they been given the correct information.
Mr Justice Elias held that had an individual employee been acting alone, he or she could not have resisted the transfer and remained with ICI. However, he found that the employees had collectively relied on the representations made by ICI and that had they not been satisfied about the terms under which they would be employed they would have resisted the transfer and that this collective opposition would probably have been sufficient to prevent the transaction from going ahead.
He found that the employees had not successfully made out their claims relating to statements about job security and general terms and conditions, but he did find that ICI had honestly but negligently misstated the pension benefits that RES would provide.
ICI had told employees their pension benefits in the new RES scheme would be broadly similar to the ICI scheme benefits and would be within half a per cent of those provided under the ICI scheme. In fact the pension benefits provided by the RES scheme turned out to be up to 5% less generous than those provided by ICI.
Further pensions information was later given to the employees and ICI argued that they had had the opportunity to take advice from either RES or independent pensions experts on the differences between the benefits.
The employees also alleged that ICI's conduct in making the representations constituted a breach of the duty not to undermine trust and confidence, the duty to act fairly and in good faith and the duty to take all reasonable steps to ensure...