In a recent Court of Appeal case, an employee who worked as a cashier in a wine wholesale business for over 10 years was dismissed on the day the business was due to transfer to new ownership. The reason for dismissal, as stated in the dismissal letter, was that company was ceasing to trade due to unforeseen circumstances. So questions were raised; should the employee’s employment have transferred to the new owners? Is this a case of automatic unfair dismissal?
What happened at the Employment Appeal Tribunal?
The employee brought a claim for automatic unfair dismissal. However, at the Tribunal the company argued that the employee, who had a strained working relationship with a colleague, had actually objected to the transfer and therefore her employment came to an end. Interestingly, in the alternative, the company had also put forward the argument that she was dismissed for ‘personal reasons’ arising out of the alleged strained relationship.
In relation to her claim of automatic unfair dismissal by reason of the TUPE transfer, the Employment Tribunal found that she had not objected to the transfer and her contract of employment transferred to the new owner. Therefore the principal reason for the dismissal was the transfer itself.
The Court of Appeal:
The company appealed this decision and the Court of Appeal ultimately held that the reason for the dismissal had been correctly identified as the TUPE transfer. The Court held that the company faced several difficulties:
- Firstly, the company gave a false reason for her dismissal. Not only was the dismissal letter inaccurate, they had further argued that she had objected to the transfer on the basis of her poor working relationship with a colleague. Having heard the evidence, the tribunal had been entitled to find that she had not objected to the transfer.
- The second difficultly was that the employee was dismissed on the day of the transfer. Whilst proximity to the transfer itself is never conclusive, it is often strong evidence in the employee’s favour.
- The third difficulty was the fact that the poor relationship between the employee and her colleague had endured for some time without the company seeking to do anything about it or terminate her employment on this basis. The company had only terminated her employment at the request of the buyer, and this gave rise to a strong inference that the transfer, rather than that relationship, was the principal reason for dismissal.
The Court refused to accept the distinction that the company sought to draw between a buyer who refuses to take on any of the existing workforce, a situation that it was argued would amount to dismissal by reason of the transfer, and one who picks out one or two individuals to be dismissed for ‘purely personal reasons’. Understandably the Court went on to reject this distinction.
How can employers avoid unfair dismissal claims during TUPE?
It is important to remember that dismissals will be treated as automatically unfair if the sole or principal reason for the dismissal is the transfer itself, unless it can be shown that the dismissal is for an economic, technical or organisational (ETO) reason entailing changes in the workforce.
Cases will inevitably turn on their own specific facts however this case underlines that even where an employer believes it has a non-transfer-related reason for the dismissal, particular caution should be exercised where the dismissal will be occurring close to the transfer date.
This case does not alter existing case law but is a helpful illustration of the relationship between competing reasons for dismissal in a TUPE scenario. Given the complex nature of any TUPE situation we would always advise seeking legal advice at the earliest stage possible.
For more information on unfair dismissal claims and TUPE transfers, please contact Charlie Wood in our Employment Law & HR team on 0161 475 7673.