Transfer-connected dismissals could be deemed fair if the transfer is for an
ETO reason, the EAT has ruled
The laws in relation to Tupe is, it seems, never straightforward. But it
appears that we may have some clarification at least on one point of
uncertainty as a result of a recent EAT case, Collins v John Ansell &
Partners, EAT 9/3/2000.
Employers may remember the case of Kerry Foods v Creber earlier this
year, which posed the question of whether a transfer-connected dismissal can
ever be fair.
The Kerry case decided that, if it were found that the principal reason for
the dismissal was connected with the transfer of an undertaking, that dismissal
was automatically unfair – under regulation 8(1) – and that was the end of the
story. It would not be open to an employer to then go on to argue that the
dismissal was for an economic technical or organisational reason – an ETO –
entailing changes in the workforce under regulation 8(2). In effect, therefore,
regulations 8(1) and 8(2) were mutually exclusive.
The concern for employers was that this was likely to mean more
automatically unfair dismissals, which would curtail opportunities to
reorganise the workforce following a transfer, in circumstances where
previously they would have been able to argue an ETO reason. It was clear that
clarification was needed and now, in the Collins case, the EAT has made a firm
statement that the approach suggested in Kerry is not the correct one.
Relying on two previous Court of Appeal decisions as authority for its reasoning,
the EAT held that the way in which regulations 8(1) and 8(2) interrelate is a
two-stage process.
First, a tribunal will decide whether an employee’s dismissal was for a
reason connected with the transfer, thus making it potential automatically unfair
under 8(1). Second, it should then go on to decide whether there is an ETO
reason for the dismissal which the employer can put forward under section 8(2),
such as genuine redundancies following a transfer.
Facts of the case
Collins worked for a small company in Tunbridge Wells, having decided to
work for a local company rather than travel into London. The company was sold
to John Ansell & Partners, however, which carried on the business in
London.
Collins, whose contract transferred under Tupe, did not want to commute and
so resigned, claiming constructive dismissal. When the case came to the EAT it
looked at the previous Court of Appeal decisions of Warner v Adnett and
Whitehouse v Chas A Blatchford & Sons.
The EAT held that the way regulation 8 works is that if the reason or
principle reason for the dismissal is transfer-connected, the dismissal is
automatically unfair unless the reason counts as an ETO reason. If it does, the
dismissal is taken out of the category of automatically unfair dismissals under
regulation 8 (1) and will be a potentially fair dismissal under regulation 8
(2). The fairness or otherwise of that dismissal is then considered in the
normal way under section 98 (4) of the Employment Rights Act 1996 – that is, in
the same way tribunals assess the reasonableness of standard unfair dismissal
claims.
In the Collins case, the EAT agreed that there was a constructive dismissal
for a transfer-connected reason, namely the moving of the business to London,
but that this reason could also constitute an "economic" or
"organisational" reason – an ETO. It would be open, therefore, to the
employer to argue that the dismissal had been reasonable under section 98 (4)
of the Employment Rights Act.
Sarah Lamont is a partner at Bevan Ashford
