23 July 2012

A recent Employment Appeal Tribunal (EAT) decision (Manchester College v Hazel & Huggins) has emphasised the significant difficulties facing employers in dealing with terms and conditions of employment after inheriting staff under a TUPE transfer.

The facts are:  The Respondent is involved in the education of offenders, and won a large contract, resulting in the transfer of 1500 staff in August 2009.  The 2 Claimants in this case worked at HMP Elmley and transferred to the Respondent’s employment.

In 2010 there was a review of terms of employment, as the acquisition of the new work had hit some unforeseen financial difficulties.  Staff (both those who had transferred and the Respondent’s existing staff) were asked to agree pay cuts.  The 2 Claimants refused.

Eventually they were dismissed from their old contracts in July 2010.  They were offered, and accepted, employment on the new lower terms, and they brought claims that they had been unfairly dismissed from the old contracts of employment.

The tribunal and the EAT upheld the claims.  The dismissals were due to a refusal to agree new terms of employment, and the changes that were sought were related to the TUPE transfer.  They were an attempt to harmonise (and reduce) salaries and benefits following the transfer.  The fact that this affected non-transferring employees as well, did not stop the dismissals being transfer related.  The dismissals were not for an “ETO” reason (economic technical or organisational reason entailing changes in the workforce) because the make-up of the workforce was not changing (an earlier redundancy process had been concluded) – a change of salary is not a change in the workforce.  The dismissals were automatically unfair and contrary to TUPE.  The Respondent was ordered to reinstate the Claimants on their original salary, even though this would involve problems with the Unions and other staff who would be disgruntled, having accepted the lower salary and not brought claims.

This case highlights the extreme difficulty faced by employers in addressing terms and conditions after (even a year after) a TUPE transfer.  The prohibition on transfer-related changes is indefinite in time – if the changes are related to the transfer, they are not allowed.  Other recent cases have taken a slightly softer line in accepting that changes may be unrelated to a transfer, and it remains to be seen if this new approach will be followed in other cases.  At a time of upheaval in many sectors (such as the education sector, in which bto is extensively involved) this is a cautionary tale.