Transfer causing substantial detrimental change

The situation is different if the transfer results, or will result, in a substantial worsening in working conditions. Under regulation 4(9) of TUPE, where a transfer involves, or would involve, a substantial change in working conditions to the material detriment of a transferring employee, that employee is entitled to regard themselves as having been dismissed and claim unfair dismissal or a redundancy payment. Someone who relies on their rights under regulation 4(9) cannot claim payment in lieu of any contractual notice period.

A claim under regulation 4(9) can be brought either before or after the transfer. The case law is not clear as to how long it might be safe to wait after the transfer. In principle, a statutory right under TUPE can never be “waived” but in practice, the longer the delay, the harder it becomes to show that the transfer was the cause of the detriment or the decision to resign, as opposed to some unrelated reason.

A change in working conditions can be substantial even if it does not result in a breach of the employment contract. A substantial change in working conditions could include either a significant change to contract terms, physical working conditions or non-contractual benefits. However, reps should note that the 2014 Regulations have placed an important limit on the protection offered by regulation 4(9) in the context of changes to workplace relocation following a transfer.

As a result of the combined effect of new regulations 4(5A) and 7(3A) of TUPE, for all transfers on or after 31 January 2014, a forced relocation following a TUPE transfer is no longer a substantial change in working conditions for the purpose of regulation 4(9). This means that a forced relocation after a TUPE transfer will no longer result in a finding of automatically unfair dismissal. This change has been achieved by expanding the definition of “changes to the workforce” capable of justifying a contract variation or dismissal for an economic, technical or organisational reason, to add changes to the place where an employee is employed. This definition is looked at in more detail on page 383.

Reps should remember that even though a dismissal as a result of a post-transfer change of workplace will no longer be automatically unfair, it must still meet all the normal requirements of a fair dismissal. In particular, there must be proper consultation, a search for alternative employment and if redundancy is unavoidable, notice or notice pay, together with a redundancy payment for qualifying employees (see Chapter 11).

Regulation 4(9) only protects employees who are inside the pool of transferring employees. Anyone outside the pool who decides to resign because their working conditions are substantially worsened as a result of a TUPE transfer (say, for example, because their workload substantially increases or decreases) cannot rely on regulation 4(9). Instead they must point to a fundamental breach of contract, and bring a constructive dismissal claim (see page 269 of Chapter 10).

A dismissal in breach of regulation 4(9) is automatically unfair. If an employee resigns before the transfer date in anticipation pf a substantial detrimental change in breach of regulation 4(9) intended by the transferee, liability for that dismissal will transfer to the transferee on the transfer date.

It will be obvious from the above that claims under regulation 4(9) of TUPE and constructive dismissal claims are very high-risk courses of action that should only ever be a last resort, after taking careful advice, since both kinds of claim involve resigning from your employment.