Protection against unfair dismissal and TUPE

Basic principles

Under regulation 7 of TUPE, neither the old employer (transferor) nor the new employer (transferee) may fairly dismiss an employee either:

• Because of the transfer; or

• For a reason connected to the transfer, unless that reason is an economic, technical or organisational (ETO) reason entailing changes in the workforce. (Relevant legislation: Regulation 7 TUPE.)

If there is no valid ETO reason, the dismissal will be automatically unfair. Liability for any automatically unfair dismissal carried out by the original employer will pass to the new employer on the transfer date.

If the only or main reason is a valid ETO reason, the dismissal will be fair, as long as the employer met all the other requirements of a fair dismissal under section 98(4) of the Employment Rights Act 1996 (see Chapter 10: Dismissal).

If the ETO reason is redundancy, the usual redundancy laws apply, including the need to look for alternative employment and the right to a redundancy payment (see Chapter 11: Redundancy).

The TUPE regulations do not stop an employer dismissing fairly for a reason unrelated to the transfer, for example gross misconduct or failure to follow a reasonable instruction, but the employer must follow the normal unfair dismissal principles set out in section 98(4) of ERA 96 (see Chapter 10: Dismissal).

A dismissal for a reason unrelated to the transfer such as running out of money to pay wages, can still be unfair. However, because the reason does not relate to the transfer, the fairness or otherwise of the dismissal is governed by section 98(4) of ERA 96 and liability for the dismissals does not pass to the transferee (Dynamex Friction v Amicus [2008] EWCA Civ 381).

Protection against unfair dismissal is available under regulation 7 whether the dismissals take place before or after the transfer, whether dismissals are carried out by the transferee or the transferor and whether or not the employee is included among the group of transferring employees.

TUPE also protects against constructive unfair dismissal, and deemed dismissal under regulation 4(9) of TUPE — where an employee resigns as a result of a substantial and detrimental change in working conditions.