A redundancy may be ‘transfer-related’ and thus automatically unfair, depending on the specific reason for the dismissal.

In the recent case of Vision Information Services v Coutinho the employee had been made redundant from the failing business in which he worked. Negotiations for the sale of that business had started some time earlier but had not proved successful. The sale of the business eventually took effect some four months after his dismissal.

The EAT has upheld an employment tribunal’s decision that the sale was a TUPE transfer and the dismissal was ‘transfer-related’ and thus automatically unfair. Furthermore, the transferor could not argue that there was an ‘economic, technical or organisational reason’ for the dismissal (which would have made it fair under TUPE) because the reason for the reorganisation was to make the business more saleable rather than to ensure a continuation of the business. The employee was the most highly-paid employee in the business and negotiations for the sale had simply been ‘put into parking’ until he had been dismissed.

Points to note –

  • It did not help the two respondent companies in this case that they had failed to disclose any documentation relating to the transfer to the tribunal and that their only witness was unable to attend the tribunal hearing because of ill-health. The tribunal refused to allow an adjournment of the hearing and no other witness was put forward. Employers should appreciate the importance of thorough preparation for a tribunal hearing.

  • Because TUPE applied, all legal liability to the claimant passed from the transferor to the transferee. However, the transferor was allowed to appeal the tribunal decision because, if the appeal had been completely successful, it would have had to pay compensation to the claimant. In fact (and very sensibly) the transferor and transferee companies had agreed terms for joint representation before the EAT to save legal costs. It is always worth agreeing commercial terms to cover ‘hidden’ employee claims of this nature.

  • The case of Coutinho predated the 2006 TUPE regulations. If they had applied, details of the redundancy would have had to have been included in the ‘employee liability information’ notified by the transferor to the transferee under TUPE Reg. 11, even though it had taken place four months earlier, because it was ‘transfer-related’.