The Employment Appeal Tribunal (EAT) recently outlined the circumstances in which a dismissal to give effect to contractual changes will be automatically unfair under TUPE.
In this case, an employer successfully bid for contracts from the Learning and Skills Council. The Council’s employees then transferred to the employer under TUPE.
However, upon discovering hidden costs post-transfer, the employer requested voluntary redundancies. It then attempted to harmonise the remaining employees’ terms and conditions of employment. The employees objected to the resulting pay cut. They were dismissed and claimed unfair dismissal. The employer defended the claim on the basis that there was an economic, technical or organisational (‘ETO’) reason for the dismissals, entailing changes in the workforce.
The EAT held that these dismissals were automatically unfair on the grounds that they did not entail changes in the workforce. This was despite the fact that the employer was also making other employees redundant. However, the EAT identified that the dismissals for refusing to accept the new terms were separate from those that were being made by reason of redundancy, and that the imposition of new terms did not in itself constitute a change in the workforce.
Employers will often want to make changes to terms and conditions of employment after acquiring employees under the TUPE regulations. It is sometimes thought that it is possible to simply ‘tag on’ one or more redundancies to a project to change terms and conditions of employment, assuming there is an ETO reason for making the changes. This case demonstrates that employers must look very carefully at the reasons for changing terms and conditions and the reasons for proposed changes in the size of the workforce, and ensure that they are sufficiently linked to make out the ETO defence.
The full case can be found at here (Case name: Manchester College v Hazel UKEAT/0136/12/RN).