In a recent Court of Appeal case, an employer unsuccessfully argued that the dismissal of an employee prior to a TUPE transfer was unconnected to the transfer and carried out for purely personal reasons.
The facts of the case
The Claimant was employed as a cashier with H&W Wholesale Ltd (H&W), a wine wholesale business.
It was decided that H&W would cease trading for financial reasons. It was then agreed that Hare Wines Ltd would take on the business and employees of H&W in terms of a TUPE transfer.
The Claimant had a strained working relationship with one of the employees, who was about to become a director of Hare Wines Ltd.
Meetings were held with the other employees of the company, who were told that their employment would transfer to Hare Wines Ltd. However, following the Claimant's meeting she was informed that she was being dismissed, effective immediately.
The TUPE Regulations provide that:
- A relevant business transfer will not terminate the contract of employment of any person employed by the transferring business, except where the employee objects to the transfer. The contract of employment will continue to have effect as if it was originally made between the employee and the new employer.
- Should an employee object to a TUPE transfer, the transfer shall operate so as to terminate the employee's contract of employment. This shall not be treated as a dismissal.
- Where, either before or after a transfer, an employee of the transferring business or the new employer is dismissed, that employee will be treated as being automatically unfairly dismissed if the sole or principal reason for the dismissal is the transfer.
The Claimant submitted claims for redundancy pay; notice pay; and automatic unfair dismissal by reason of a TUPE transfer.
The Claimant's position was that she was dismissed because of the impending transfer, having been told in a meeting that she was being dismissed as Hare Wines Ltd did not want her.
The Respondent's position was that the Claimant objected to the transfer and therefore she should not be treated as having been dismissed - referring to evidence that the Claimant said she was not happy to work for Hare Wines Ltd and did not want to transfer.
The Claimant's evidence was preferred and the reason for the dismissal was found to be the TUPE transfer; not the difficult working relationship she had with her colleague. She was dismissed because Hare Wines Ltd did not want her on their books.
The Court of Appeal took into account that the Claimant was dismissed on the day of the transfer, and the fact that the poor working relationship with her fellow employee had endured for some time without H&W trying to terminate her employment.
Employers are advised to exercise caution if they are considering dismissing an employee in circumstances where the dismissal could be seen to be connected to a TUPE transfer. Even if the reason for dismissal is an employee's conduct, if it is acted on at the point of a transfer there is a risk of the transfer being found to be the sole or principal reason for the dismissal, making the dismissal automatically unfair. This risk increases the closer a dismissal is to the transfer date.
In this case, the employer may have believed that it had a legitimate reason for dismissing the Claimant. However, as the Court of Appeal pointed out, there was no evidence that prior to the transfer the Claimant's working relationship was regarded as cause for dismissal. It was the transfer that made the difference: the problems in the working relationship were tolerable pre-transfer but were not going to be post-transfer.
If you would like to discuss anything raised in this blog, please get in touch with your usual Brodies contact. Workbox users will find further guidance on this topic at TUPE: Outsourcing & Business Transfers.