What are economic, technical or organisational reasons for dismissal?

Some illustrations of economic, technical or organisational (ETO) reasons for dismissal include:

• Economic reasons: where the new business lacks demand for a product line the transferor used to produce;

• Technical reasons: where the new business uses new technology for which transferring employees lack skills (and cannot reasonably be trained);

• Organisational reasons: where merger has resulted in a duplication of functions, or a need to change location (and relocating new staff is not reasonable).

Only employers who carry out dismissals for a reason related to their own plans to carry on the business are allowed to defend a dismissal on the basis of an ETO reason. This defence is not available to sellers or administrators who dismiss staff in order to make the business more attractive to buyers (See Hynd v Armstrong (Court of Sessions) [2007] CSIH 16, confirmed by the Court of Appeal in Spaceright Europe Limited v Baillavoine [2011] EWCA Civ 1565).