Can a transferor borrow a transferee’s economic, technical or organisational (ETO) reason to justify a TUPE-related pre-transfer dismissal? The Scottish Court of Session considered this question in Hynd v Armstrong and others, to which it answered: “No”.
Hynd was one of two corporate lawyers working for a law firm. The partners decided to dissolve the partnership and form a new practice. This amounted to a TUPE transfer. There was a reduced requirement for corporate lawyers in the new practice, and Hynd was made redundant the day before the transfer took place.
Hynd argued that he had been automatically unfairly dismissed under TUPE 1981. The employers argued that the dismissal was fair for an ETO reason.
An ETO reason can justify a TUPE-related dismissal where “[it entails] changes to the workforce of either the transferor or the transferee before or after a relevant transfer [and] is the reason or principal reason for dismissing the employee”.
The Court of Session said that an ETO had to relate to the future conduct of the business. As Hynd was dismissed before the transfer, this could not apply as the old firm ceased to exist post-transfer.
What you should do
While there is often commercial pressure for the transferor to dismiss before a transfer happens, this approach risks claims of automatic unfair dismissal.
Compensation may, however, be limited if it can be shown that the employee would have been made redundant shortly after the transfer in any event.