TUPE: Establishing reason for dismissal is not always clear cut

The claimant was dismissed two days before the transfer of the business – a wine wholesaler – to another company
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Does an employee who is let go shortly before a transfer of business always qualify for automatic unfair dismissal? Dr John McMullen from Wrigleys Solicitors considers a recent case that went to appeal.

It’s understood that under TUPE (Transfer of Undertakings (Protection of Employment) Regulations), where the sole or principal reason for an employee’s dismissal is the transfer of an undertaking, the dismissal is automatically unfair.

In Hare Wines Ltd v Kaur, the employment appeal tribunal (EAT) had to consider a case where an employee was dismissed shortly before the transfer.

It emerged that the motive of the new (transferee) employer in encouraging the transferor to dismiss the employee was to avoid employing her because of problems in her working relationship with another employee.

Was this a case where the sole or principal reason for the dismissal was the transfer, or should the employment tribunal have found that the dismissal was really about the anticipation of ongoing difficulties in a working relationship, and therefore for reasons which were purely personal to the employee?

The transfer

The claimant was employed as a cashier by H&W Wholesale Limited (a wine and beer wholesale business). The company got into financial difficulties and Hare Wines Ltd agreed to purchase it and take on any employees under TUPE.

However, this was to the exclusion of the claimant, whose employment was terminated two days before the transfer, and then brought a claim for automatic unfair dismissal.

An employment tribunal found that the transferee did not want to employ the claimant because of difficulties in her working relationship with a Mr Chatha, who was also transferring, and for that reason was told she was not wanted. Mr Chatha would have been her supervisor going forward.

The tribunal found that the claimant would have been employed immediately before the transfer but for her dismissal two days earlier, and the real reason for the dismissal was therefore the transfer.

Appeal

Hare Wines appealed. The basis of its appeal was that the existence of reasons, personal to the employee, precluded the transfer from being the reason for the dismissal.

The EAT rejected this and upheld the employment tribunal decision. It was influenced in particular by three things.

First, TUPE Regulations are designed to protect workers’ rights and according to Mr Justice Choudhury, who presided over the appeal, “one needs to be very careful in expanding or introducing what might appear to be new categories of defence and which may undermine the protection afforded to employees in this situation”.

Second, it was clear from the 1989 European Court case of P Bork International v Foreningen AF Arbejdsledere i Danmark that an important factor that may be taken into account in deciding the reason for dismissal is its proximity to the transfer.

In the words of the court: “In order to determine whether the only reason for dismissal was the transfer itself, account must be taken of the objective circumstances in which the dismissal occurred, and in particular, in a case like the present one, the fact that it took place on a date close to that of the transfer”.

Third, although it was true to say that the work relationship difficulties could be described as “personal” to the claimant, the EAT was influenced by the fact that the difficulties were longstanding and ongoing.

In the opinion of the EAT, these circumstances did not arise just on the point of transfer and were not going to end just afterwards.

The EAT concluded that, in a situation where an employer had not taken action to resolve a relationship difficulty prior to the transfer, but does so only at the point of transfer by dismissing one of the parties in that difficult relationship, it is open to the tribunal to conclude that the reason for the dismissal was in fact the transfer.

So if an issue concerning an employee’s conduct or capability (which would not normally be a transfer-related issue) was suddenly acted upon on the point of transfer, the transfer might well be deemed to be the sole or principal reason for the dismissal.

Taking all of these factors into consideration, the employment tribunal decision was upheld.

How should employers respond?

The practical advice is that potential new employers under TUPE are not permitted to “cherry-pick” or decide not to take over certain employees who are clearly assigned to the transferring organisation.

In other words, they cannot simply choose which employees are “desirable” and insist that colleagues felt to be troublesome are left behind or dismissed.

Any perceived difficulties with transferring employees must be ironed out by the new employer following appropriate and fair employment procedures.

Dr John McMullen

About Dr John McMullen

Dr John McMullen is a partner at Wrigleys Solicitors LLP and author of Business Transfers and Employee Rights.
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