In Hazel v Manchester College, the Court of Appeal (CA) considered the case where an employer tried to cut costs, and also tried to harmonise 37 different sets of staff terms and conditions after a series of TUPE transfers.

In an attempt to achieve this, the claimant employees were asked to accept pay cuts of over 10%. They refused and so were dismissed but were immediately re-employed, albeit under protest, on the new reduced terms.

They claimed that their dismissals had been automatically unfair as the sole or principal reason for their dismissal was the TUPE transfer.

The CA agreed and rejected the employer’s claim that the dismissals had been for ‘an economic technical or organisational reason entailing changes in the workforce’ (‘an ETO reason’) because, unless the contract variations were put in place, it would have had to make redundancies.

Points to note –

  • Although the background to post-transfer contract variations may have been an attempt to avoid redundancies, a tribunal must look at the immediate reason for the dismissal of each individual claimant. In this case, the claimants had been dismissed because they would not agree to a post-transfer pay cut, not because they were being made redundant. As this is not an ETO reason, their dismissals were automatically unfair
  • The CA confirmed that the tribunal awarded the appropriate remedy by ordering the employer to re-engage the claimants on their old terms with their pay protected and frozen at that level until the new (lower) pay scale caught up with their salaries.
  • Would this case be decided differently now? TUPE regulation 7 was amended in January this year and now states that ‘a substantial reason of a kind such as to justify dismissal’ may now amount to an ETO reason for dismissal. We shall have to wait for the courts to determine whether this will make any difference to advice given to employers trying to effect post-transfer changes.

This article is part of the UK Employment Law Update for March 2014