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The HR Forum

TUPE &amp; ETO

Hi everyone

Whilst doing the employment law module (level 5) I was reading some of the case law, in particular Enterprise Managed Services V Dance 2009, (summary here: http://www.shoosmiths.co.uk/client-resources/legal-updates/Changing-employment-terms-after-a-TUPE-transfer-EAT-signals-greater-flexibility-1288.aspx) and I was wondering if someone could explain this to me a bit further.

From reading about what happened my initial thoughts were that if the employees hadn't been transferred then their terms wouldn't have been changed therefore this would have been based on the transfer. However the EAT decided differently, and decided that it was a valid productivity reason and I'm struggling to understand why/how.

I'm now a little bit confused, I know I'm probably way over simplifying (or more than likely over-thinking :)), but if someone could explain further why this decision went the way it did I would be so grateful. Am I looking at it from an incorrect perspective?

Thanks so much

Jacquie

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Replies

  • MorningJacquie

    Thanks for the post and sharing,. Nothing like a good TUPE question to start you off on a Monday ;-)

    In Enterprise Managed Services Ltd v Dance & others the EAT considered whether transferred employees whose contracts were terminated when they refused to accept a change in terms were automatically unfairly dismissed for a reason connected with the transfer.

    This related to harmonisation of terms and conditions by EMS post transfer of a group of employees.  The background to the case was that two contracts (servied by EMS and Williams) which had previously been provided to a business were rolled into one and EMS won the tender.  Prior to winning the tender EMS undertook changes to their own employees ts and cs in order to ensure they could meet the new productivity and efficiency targets within the new service contract.  EMS subsequently decided post winning the contract that the TUIPEd Williams employees also needed to operate under similar performance measures in order to deliver the contract, 20 or so of the TUPEd engineers objected to the change and were subsequently dismissed.

    As you will know under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (TUPE) any dismissal of an employee either before or after a relevant transfer will be automatically unfair where the sole or principal reason for the dismissal is either:

    1.The transfer itself; or

    2. A reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce (an ETO reason).

    The ET unanimously held that the transfer was not the sole or principal reason for the dismissals (point 1). However, the tribunal was divided over whether the dismissals were connected with the transfer (point 2). The majority view was that the dismissals were connected with the transfer as the principal reason for the change in the terms (and the resulting dismissals) of the Williams engineers was to achieve harmonisation with the terms of the EMS engineers.

    EMS appealed to the EAT. It argued that its decision to vary the terms of the Williams engineers was driven by the need for productivity and was firmly rooted in the success of the pre-transfer changes to the EMS engineers’ terms.  Note EMS did not advance an ETO defence.

    The EAT allowed EMS’s appeal and remitted the case to a fresh employment tribunal to consider.

    The EAT foiund that the essential question to be answered was: what was the reason in the minds of the management of EMS for proposing changes to the terms of the TUPEd engineers and for dismissing those who refused to accept the varied terms? In answering this question, the majority of the employment tribunal had adopted flawed reasoning. The majority had decided that the reason for the variation was to harmonise terms and as a consequence improve productivity. However, this was inconsistent with its parallel finding that the harmonisation was driven by the success of the pre-transfer changes to improve productivity (in other words, that the sequence of events was actually the other way around).

    ”In our judgment there is a straight line linking what occurred in the Respondent’s business in the early part of 2009 to effect productivity and what occurred in it post-transfer to those who as it happens were inherited from Williams who were not on the productivity scheme [...] It seems to us that since it is open to an employer to effect productivity changes in accordance with the ordinary law, this does not become unlawful when there has been a relevant transfer if the reason is connected to that drive for productivity changes”

    So in summary the view in the Dance case is that an intention to improve productivity and efficiency rather than harmonisation was the reason for the post-transfer changes and the resulting dismissals. The Dance case is important and it is typical in re-tendering situations.  But of course any changes post TUPE should always be approached with caution!

    I hope the above helps!

    Sarah

    • Yes Sarah, thank you so much, that helped lots. I was looking at it from the wrong perspective. You've explained it really clearly, thank you!!!!

      Jacquie

      • My pleasure Jacquie! Kind regards Sarah

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