Bosses’ inflexible friends

Employers on the move must review their Tupe position as part of the due diligence process

Martin Warren
Martin Warren

Away from the furore surrounding the Beecroft report are real issues for businesses, including the Transfer of Undertakings (Protection of Employment) (Tupe) regulations it touches on. While the Government has taken its first steps towards reform by publishing a call for evidence, the report makes the case for an urgent review.

Formal consultation should follow soon. When it does, one issue that has drawn little attention so far should be added to the list, that of lower court decisions surrounding changes of location on transfer.

The case of Abellio London Ltd v Musse & Ors – along with the earlier Tapere v South London and Maudsley NHS Trust – presents headaches for practitioners. Although both cases involved employees claiming unfair dismissal when they resigned in response to a change in place of work, they also highlight a problem whereby a transferee makes employees redundant after transfer because they operate from another location.

In addition to normal constructive dismissal, in a Tupe situation there is an alternative quasi-constructive dismissal under regulation 4(9), which deems a resignation to be a dismissal where it arises in the context of, “a substantial change in working conditions to [their] material detriment”. Breach of contract is not required, separate constructive dismissal provision being provided by regulation 4(11).

The problem is the assumption in these cases that such a dismissal is not for an “economic, technical or organisational” reason and is therefore automatically unfair (regulation 7). This was the finding of the Employment Tribunal in Tapere which found no accompanying changes in the numbers or job functions of the workforce in accordance with the principles of Berriman v Delabole Slate Ltd [1985].

In other words, relocation connected with a transfer does not entail “changes in the workforce”. Dismissal was therefore unfair – a ­conclusion that was not appealed.

Abellio followed this year. The claimant bus drivers were to transfer to a new depot some six miles away on a service provision change. Applying Tapere, the tribunal upheld claims that employees were dismissed under both ordinary constructive dismissal (regulation 4(11)) and the 4(9) quasi-constructive dismissal. Their effective dismissal was transfer-related and, on the basis of Berriman, automatically unfair.

While it is true that the Court of Appeal indicated in Berriman that “entailing changes in the workforce” referred to something such as a reduction in numbers or a substantial change in duties, it is arguable from the context that this was specific to the facts. There, the transferee sought to harmonise the terms of the new workforce with the existing workforce – different from a change of location on transfer over which the transferee has no choice.

Unfortunately, until further case law or legal change, transferees risk being unable to move inherited work to another location without every dismissal being automatically unfair. Transferees need to be mindful of the various claims open to employees, therefore. This should be considered as part of due diligence.