Employment Update: Unfair Dismissal/TUPE

18 June 2008

Dismissals may be fair for ‘some other reason’ when a customer changes supplier. Whether or how TUPE applies on a service provision change 'cannot reasonably be expected to be within the knowledge of the outgoing contractor'.

In Atlas Cleaning Ltd v Liversedge and others, the claimants were cleaners employed by Atlas to work at a Zara store. After an unexplained theft from the store, even though none of the claimants were implicated, Zara said they did not want the claimants working at their store. Atlas made attempts to change Zara's mind but failed. They offered the claimants the only alternative cleaning work that they had which was at an H&M store at the same shopping precinct but for less pay and for only a few weeks because they knew that they were about to lose the H&M contract.

The claimants refused, were dismissed and claimed unfair dismissal.

The employment tribunal found that there was 'some other substantial reason' (ie. a potentially fair reason) for their dismissal and that a fair procedure had been used.

However, it still found that the dismissals were unfair. A reasonable employer would, in relation to the alternative employment on offer, have considered raising the pay to what the claimants had previously been getting and also advising them on whether TUPE might apply to the 'service provision change' when Atlas' contract with H&M came to an end so as to give them continuity of employment.

The EAT has now allowed the employer's appeal. It was not a question of whether a reasonable employer would have taken these extra steps but whether this employer's failure to do so made the dismissals unfair, and it did not.

Points to note -

  • The EAT said that the tribunal was right to accept that Zara's commercial decision not to allow the claimants to continue to work at its premises was 'some other substantial reason' and a potentially fair reason for dismissal. However, it was relevant to the fairness of Atlas' decision to dismiss that it had made 'repeated efforts' to persuade Zara to change its mind.

  • The EAT also said that the facts and circumstances to be examined in deciding whether or how TUPE applies on a service provision change 'cannot reasonably be expected to be within the knowledge of the outgoing contractor'. As employer, a contractor need do no more in order to try to save its employees' jobs than it would do commercially to try and keep the contract.

Authors