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TUPE-related Harmonisation of Conditions Unfair Dismissal and Re-engagement Order

The Employment Appeal Tribunal (“EAT”) recently made findings in relation to TUPE-related dismissals and the remedy of re-engagement in Manchester College v Hazel and another.  We consider each of these aspects separately, both of which are of importance to employers.

TUPE-related dismissals

Background

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) protect employees by providing that they are unfairly dismissed if the sole or principal reason for the dismissal is either:

a)   the transfer itself; or

b)   a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce (“an ETO reason”).

A transfer means a transfer of employees under TUPE from one employer to another employer.

This case concerns the limb (b) reason for dismissal; an ETO reason.

Facts

The employees in this case (“the Claimants”) joined Manchester College (“the College”) following a TUPE transfer in August 2009.  The College proposed redundancies in January 2010, but the Claimants were told in May 2010 that they were not at risk of redundancy.  In June 2010 the Claimants were offered contracts on new terms and conditions.  These new terms and conditions included a pay reduction and the Claimants refused to sign the new contracts, leading to their dismissal in July 2010.

The Claimants claimed that their dismissals were unfair because they were for a reason connected with the TUPE transfer that was not an ETO reason (limb (b) above).

The Judgment

The EAT noted that the reason for the Claimants’ dismissals was their refusal to accept new terms and conditions.  The dismissals were for a reason connected with the transfer and they were for an economic, technical or organisational reason.  However, the last part of the ETO reason was not satisfied; the dismissals did not entail changes in the workforce.

There is no definition of “entailing changes in the workforce”, but previously it has been held to mean a change in the functions or a change in the numbers of the workforce.  Although the College argued that there had been a change in the numbers, the EAT considered that the redundancy exercise had taken place before the harmonisation of changes of terms and conditions and was a separate issue.  The College’s argument about the change in numbers could not therefore succeed and the dismissals were unfair.

What does this mean for employers?

This case emphasises that harmonisation of terms and conditions relating to TUPE is not a fair reason for dismissal.  Employers who are considering changing terms following a TUPE transfer should be extremely cautious when planning these changes and should only consider this where there are genuinely “changes in the workforce”.  Employers should avoid dealing with one issue at a time in the way that the College did, as the College’s argument that it had an ETO reason may well have been successful had the redundancy exercise been carried out at the same time as the harmonisation of terms and conditions.  Whether there is an ETO reason or not depends very much on the employer’s and employee’s specific circumstances.

Re-engagement

Background

When an employee brings an employment tribunal claim, one of the first things on an employer’s mind is the financial compensation that the employee is seeking.  However, employers should not forget that an employee can also be awarded re-instatement or re-engagement.

Judgment

In this case, the Claimants were awarded re-engagement by the Employment Tribunal and the EAT upheld this decision.  Unusually, the Claimants had been re-employed by the College on the new terms and conditions while they pursued their claims.  The re-engagement award involved the Tribunal effectively rewriting the terms and conditions so that the Claimants’ pay cut was cancelled and their salaries frozen at their original amount.  The Employment Tribunal and the EAT did not accept the College’s argument that this would cause discontent in the remainder of the workforce or the trade union.

What does this mean for employers?

Employers should bear in mind that employees may be awarded remedies other than pure compensation, and re-engagement becomes a real possibility if employees continue to work for an employer.

Hazel Robbins, Solicitor

Contact Information

fgmedia@floydgraham.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice. 

Updated: by FG Solicitors
Call us on:  0808 172 93 22

TUPE-RELATED HARMONISATION OF CONDITIONS UNFAIR DISMISSAL AND RE-ENGAGEMENT ORDER

The Employment Appeal Tribunal (“EAT”) recently made findings in relation to TUPE-related dismissals and the remedy of re-engagement in Manchester College v Hazel and another.  We consider each of these aspects separately, both of which are of importance to employers.

TUPE-related dismissals

Background

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) protect employees by providing that they are unfairly dismissed if the sole or principal reason for the dismissal is either:

a)   the transfer itself; or

b)   a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce (“an ETO reason”).

A transfer means a transfer of employees under TUPE from one employer to another employer.

This case concerns the limb (b) reason for dismissal; an ETO reason.

Facts

The employees in this case (“the Claimants”) joined Manchester College (“the College”) following a TUPE transfer in August 2009.  The College proposed redundancies in January 2010, but the Claimants were told in May 2010 that they were not at risk of redundancy.  In June 2010 the Claimants were offered contracts on new terms and conditions.  These new terms and conditions included a pay reduction and the Claimants refused to sign the new contracts, leading to their dismissal in July 2010.

The Claimants claimed that their dismissals were unfair because they were for a reason connected with the TUPE transfer that was not an ETO reason (limb (b) above).

The Judgment

The EAT noted that the reason for the Claimants’ dismissals was their refusal to accept new terms and conditions.  The dismissals were for a reason connected with the transfer and they were for an economic, technical or organisational reason.  However, the last part of the ETO reason was not satisfied; the dismissals did not entail changes in the workforce.

There is no definition of “entailing changes in the workforce”, but previously it has been held to mean a change in the functions or a change in the numbers of the workforce.  Although the College argued that there had been a change in the numbers, the EAT considered that the redundancy exercise had taken place before the harmonisation of changes of terms and conditions and was a separate issue.  The College’s argument about the change in numbers could not therefore succeed and the dismissals were unfair.

What does this mean for employers?

This case emphasises that harmonisation of terms and conditions relating to TUPE is not a fair reason for dismissal.  Employers who are considering changing terms following a TUPE transfer should be extremely cautious when planning these changes and should only consider this where there are genuinely “changes in the workforce”.  Employers should avoid dealing with one issue at a time in the way that the College did, as the College’s argument that it had an ETO reason may well have been successful had the redundancy exercise been carried out at the same time as the harmonisation of terms and conditions.  Whether there is an ETO reason or not depends very much on the employer’s and employee’s specific circumstances.

Re-engagement

Background

When an employee brings an employment tribunal claim, one of the first things on an employer’s mind is the financial compensation that the employee is seeking.  However, employers should not forget that an employee can also be awarded re-instatement or re-engagement.

Judgment

In this case, the Claimants were awarded re-engagement by the Employment Tribunal and the EAT upheld this decision.  Unusually, the Claimants had been re-employed by the College on the new terms and conditions while they pursued their claims.  The re-engagement award involved the Tribunal effectively rewriting the terms and conditions so that the Claimants’ pay cut was cancelled and their salaries frozen at their original amount.  The Employment Tribunal and the EAT did not accept the College’s argument that this would cause discontent in the remainder of the workforce or the trade union.

What does this mean for employers?

Employers should bear in mind that employees may be awarded remedies other than pure compensation, and re-engagement becomes a real possibility if employees continue to work for an employer.

Hazel Robbins, Solicitor

Contact Information

fgmedia@floydgraham.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice.