Transfer causing substantial detrimental change

The situation is different if the transfer results, or will result, in a substantial worsening of 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 to bring a tribunal claim for unfair dismissal or a redundancy payment. Regulation 4(9) is based on Article 4.2 of the Acquired Rights Directive.

Someone who relies on their rights under Regulation 4(9) cannot claim payment in lieu of any contractual notice period.

The statutory right under Regulation 4(9) of TUPE is separate from the common law right to claim constructive dismissal for an employer’s repudiatory breach of contract (see Chapter 6).

This type of claim can be brought either before or after the transfer. In most cases, it is better to stay in post after the transfer, to see how matters develop with the new employer and what can be negotiated. However, the case law is not clear as to how long it is safe to wait after the transfer. In principle a statutory right under TUPE can never be “waived”, but in practice, the more time that passes, the harder it will be to show that the detriment, or the decision to resign, were caused by the transfer, as opposed to some external factor.

A change in working conditions can be “substantial” for the purposes of Regulation 4(9) even if it does not amount to a breach of the employment contract. It could include, for example, a change to contract terms, physical working conditions, or non-contractual benefits. It can include a detrimental change resulting from an employer exercising an express contractual right to vary terms, under the 2014 Regulations (new TUPE Regulation 4(5)(b), as page 22 of the BIS TUPE guidance makes clear.

A resignation (dismissal) in breach of Regulation 4(9) is automatically unfair where the reason for the resignation is the transfer (or where notice of dismissal is given on or before 30 January 2014, a reason “connected to” the transfer), unless the change in working conditions or contract terms is for an economic, technical or organisational (ETO) reason entailing changes in the workforce (see Chapter 6). Two years’ service is required for this kind of claim.