Harmonising Employment Terms Following a TUPE Transfer

The Employment Appeal Tribunal (EAT) has held in Manchester College v Hazel and another UKEAT/0642/11 that two TUPE-connected dismissals were unfair because, although they were for an economic, technical or organisational reason (ETO), that ETO reason did not entail changes (i.e. reductions) in the workforce.

The two Claimants, Mrs Hazel and Mr Higgins, transferred to Manchester College under TUPE along with around 1,500 other employees.  Manchester College then reviewed its costs and consequently proposed 300 staff redundancies, although the Claimants were told that their positions were not at risk of redundancy.  Instead, they were asked to agree to wage reductions to harmonise their terms with the existing workforce.  The Claimants refused to agree to the wage cuts and were subsequently dismissed.  Manchester College then offered the Claimants employment on the new terms which the Claimants accepted, but they still brought unfair dismissal claims.

The EAT upheld the unfair dismissal claims. A dismissal will be automatically unfair if the sole or principal reason for that dismissal is either a TUPE transfer itself or a reason connected with that transfer that is not an ETO reason entailing changes in the workforce.  The EAT held that there was an ETO reason, being the Claimants' refusal to accept the new terms and conditions of employment.   However, it held that the ETO reason did not entail changes in the workforce because the changes in terms and conditions were unconnected with, and occurred after, the redundancy process.  This is a reminder to employers that TUPE-connected dismissals must not only be for an ETO reason but must entail "changes in the numbers or functions" of the workforce.  Harmonisation of terms is usually prohibited in a TUPE context because there is no change in employee numbers.