Protection against unfair dismissal and TUPE

Dismissals in the context of TUPE are subject to the general law of unfair dismissal and redundancy set out in Chapters 10 and 11. In addition, regulation 7 of TUPE provides some extra protection.

Important changes to regulation 7 have been made by the 2014 Regulations. The changes affect all dismissals where:

• the transfer took place on or after 31 January 2014; and

• notice of dismissal is given by the employer on or after 31 January 2014, or if no notice is given, the effective date of termination of the employment is on or after 31 January 2014.

These changes will make it easier and faster to dismiss employees in the context of a TUPE transfer. Under TUPE as amended by the 2014 Regulations:

• it is a breach of TUPE and automatically unfair for either the transferor or the transferee to dismiss an employee if the reason for the dismissal is the transfer. For example, it would be a breach of TUPE for a seller to dismiss its employees because the buyer refuses to take them on;

• a dismissal will not be automatically unfair where the employer can point to an economic, technical or organisational (ETO) reason for the dismissal entailing changes to the workforce, for example, genuine redundancies;

• a dismissal for a valid ETO reason will be fair if the employer:

◊ acted reasonably in dismissing for that reason; and

◊ met all the other requirements of the general law of unfair dismissal (see Chapter 10);

• a dismissal for a valid ETO reason will either be for:

◊ redundancy (section 98(2)(c) ERA 96); or

◊ “some other substantial reason” (section 98(4) ERA 96);

• if the dismissal is for redundancy, all the normal redundancy rules apply (see Chapter 11);

• an employer is still free to dismiss for a reason unrelated to the transfer, for example gross misconduct;

• TUPE protection applies to dismissals before and after the transfer, by either the transferor or the transferee;

• two years’ service is needed for an unfair dismissal claim based on TUPE, even though the dismissal is automatically unfair.

TUPE also protects against constructive unfair dismissal, as well as deemed dismissal under regulation 4(9) of TUPE — where an employee resigns as a result of a substantial and detrimental change in working conditions (see page 368).

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 (regulation 7(3A) TUPE), and relocating new staff is not reasonable.

Employers are not allowed to defend a dismissal on the basis of an ETO reason unless that reason relates to their own plans to continue their business. In particular, this defence is not available to sellers or administrators who dismiss staff under pressure from the buyer (Hynd v Armstrong (Court of Sessions) [2007] CSIH 16, Spaceright Europe Limited v Baillavoine [2011] EWCA Civ 1565). Instead, on the transfer date, employees of the transferor transfer automatically to the new business. The new employer must then carry out any redundancies from a pool within the combined workforce.