In Metropolitan University v Sackur and Others (2006), the Employment Appeal Tribunal found that even where changes had been made to employees’ terms and conditions of employment two years after a transfer, these may be regarded as connected with the transfer.
Under TUPE (now the Transfer of Undertakings (Protection of Employment) Regulations 2006), a dismissal for a reason connected with the transfer of a business or undertaking will be automatically unfair, unless the employer can show that the reason for the dismissal was "an economic, technical or organisational reason entailing changes in the workforce" (an ETO reason).
The facts of this case were that, in August 2002, employees from London Guildhall University ("LGU") TUPE-transferred on their LGU terms and conditions, to the University of North London ("UNL"), which then changed its name to the London Metropolitan University (the "Employer"). Two years later, the Employer informed the former-LGU employees that if they remained in employment they would be deemed to have accepted new "UNL-style" employment contracts. A number of the former-LGU employees refused to accept these contracts, and brought unfair dismissal claims in respect of their subsequent dismissals.
The Tribunal held that: (i) the dismissals were related to the transfer; and (ii) the Employer had not shown an ETO reason, so the dismissals were unfair. The Employer appealed to the EAT, arguing that both (i) and (ii) had been incorrectly decided.
The EAT held that:
(i) the likelihood of a dismissal being related to a transfer would normally decrease over time, but since the Employer had always indicated an intention to put LGU staff onto UNL terms, these variations (and related dismissals) were connected to the transfer, despite the delay; and
(ii) the decision of the Court of Appeal in Delabole Slate Limited v Berriman (1985), that an ETO reason entailing changes in the workforce could not be made out unless the Employer had changed the overall number or functions of the workforce, remained good law. In this case, although there was an organisational reason for the harmonisation of terms, since there was no change in the workforce as defined in Berriman, the Employer had no ETO defence.
Lessons to learn
Harmonisation itself may be an organisational reason but it will not make dismissals fair, or variations valid, unless it entails a change in the overall numbers or functions of the workforce.
What employers should avoid is the appearance that they are just varying the new employees’ terms of employment to bring them in line with those of pre-existing employees. If an employer does not inform employees at the time of a transfer that there will be a change to their terms and conditions and, some time after the transfer - say after six months or more - the employer notifies its employees that it is reviewing its staff handbook and that changes will be made to its policies, which will affect all employees, it is unlikely that such variations would be regarded as connected to the transfer.
Changes to terms and conditions for the benefit of employees, even if they are not carried out for an ETO reason, are less likely to be challenged (but beware - a challenge to one detrimental change in a package which is largely better for an employee, is likely to be successful, even if the overall package was agreed).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
