Dismissing employees and harmonising employment terms after a TUPE transfer

Dismissals following a TUPE transfer are automatically unfair if the sole or principal reason for them is a) the transfer or b) a reason connected with the transfer which is not an economic, technical or organisational reason entailing changes in the workforce.

A common question asked of our TUPE team is how much time needs to elapse for a dismissal to no longer be “connected” with a transfer. The same question is often asked in relation to post-transfer changes to employment terms which are void for the same reasons. However, there is no magic answer. Whilst Tribunals consider the length of time which has passed since the transfer, the length of time does not itself determine whether or not there is a connection. In one case a change to employment terms made 2 years after a transfer was found still to be connected with the transfer.

In Manchester College v Hazel, the transferee college tried to harmonise employment terms following a TUPE transfer. Two employees refused to accept the new terms, which included a pay cut, so the college dismissed them and offered employment on the new, harmonised terms. The employees accepted the new terms but claimed that their dismissals were unfair and sought reinstatement on their old terms.

The college argued that the harmonisation exercise formed part of a package of wider changes – including an earlier round of redundancies – made necessary by the economic climate and that it was unconnected with the transfer. In other words, there was a supervening event that broke the causal link to the transfer.

The Employment Appeal Tribunal (EAT) took the view that the dismissals were due to the refusal to accept new terms and that this was connected with the transfer. Whilst there was an economic reason for the changes, it did not involve “changes in the workforce”. The exemption to the “automatically unfair” rule did not therefore apply. Changes in the workforce means changes in the number of employees or changes in their functions. Here there was neither. The earlier redundancy programme had already been completed and harmonising terms did not involve a change in functions. Therefore the dismissals were unfair. The EAT decided that the employees should be re-engaged on the new terms but on their old, higher level of pay (which should be frozen until the new pay regime “caught up”).

The case is a reminder that the consequences of dismissing staff and harmonising terms following a TUPE transfer turn on the particular circumstances in question and that Tribunals are prepared to reverse harmonisation changes made by employers unless there is a supervening event.
 

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.