TUPE Transfers: Impact of Substantial Changes in Working Conditions on Employee Rights
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Understanding TUPE Protections and Employee Rights
Employees enjoy special protections when their employment is transferred to a new employer under the Transfer of Undertakings (Protection of Employment) Regulations, commonly known as TUPE. Key protections include the preservation of most employment terms upon transfer and restrictions on the new employer’s ability to alter these terms. Additionally, if the transfer leads to a substantial change in working conditions to the employee’s material detriment, the employee can consider themselves dismissed and claim unfair dismissal. The Employment Appeal Tribunal (EAT) recently addressed whether post-transfer contractual changes constituted such a substantial change.
Case Background: TUPE Transfer and Contractual Changes
L, an operations technician at a power plant in Wales, was transferred to DSUK’s employment in March 2017 under TUPE regulations. Initially, most of L’s terms and conditions were preserved. However, DSUK soon introduced changes to L’s standby/call-out arrangements and responsibilities for issuing safe work permits. Feeling aggrieved by these changes, L resigned and claimed constructive dismissal, arguing:
- The changes represented a substantial alteration in his working conditions, causing material detriment.
- His dismissal was automatically unfair because the primary reason was the TUPE transfer.
Tribunal and EAT Decisions
Initial Tribunal Decision
An employment tribunal dismissed L’s claim, rejecting his arguments about substantial changes and the unfair dismissal claim.
EAT’s First Decision
L appealed, and the EAT overturned the tribunal’s decision, ruling that the post-transfer changes indeed involved a substantial change in working conditions to L’s material detriment. The case was sent back for a new tribunal hearing.
Second Tribunal Decision
The second tribunal also dismissed L’s claim, concluding that the TUPE transfer was not the sole or principal reason for his dismissal. It reasoned that the changes were necessitated by DSUK’s need to address pre-existing issues at the power plant, which is a valid economic, organizational, or technical reason for changes.
EAT’s Final Decision
L appealed again, and the EAT upheld his appeal, overturning the second tribunal’s decision. The EAT determined that the tribunal had erred in law by finding that L was fairly dismissed for reasons not relied upon by the employer. The EAT concluded that the sole or principal reason for L’s dismissal was the TUPE transfer itself, rendering the dismissal automatically unfair.
Key Insights from the EAT Decision
The EAT’s ruling underscores several important principles:
• Material Detriment: Any substantial change in working conditions post-TUPE transfer that negatively impacts the employee can be grounds for claiming unfair dismissal.
• Employer’s Stated Reasons: Tribunals must base their decisions on the reasons explicitly stated by the employer. If the employer claims an economic, organizational, or technical reason for changes, this must be clearly evidenced.
• Pleading Requirements: Both claimants and respondents must clearly state their cases. A respondent’s defence should be well-drafted to ensure the claimant understands the basis of any defence.
Final Thoughts
This case highlights the complexities involved in TUPE transfers and the protections afforded to employees. Employers must be cautious when making post-transfer changes to terms and conditions, ensuring that any substantial changes are justifiable and not solely linked to the transfer itself. Employees should be aware of their rights and the grounds on which they can claim unfair dismissal if adversely affected by such changes.
For further reading on the EAT’s decision and its implications, see to the full EAT judgment here.
