Pre-Transfer Dismissal Unfair Even Though No Buyer Identified

In Spaceright Europe Ltd v Baillavoine [2011] EWCA Civ 1565 a pre-transfer dismissal was held to be automatically unfair regardless of the fact that the identity of the buyer (or transferee) was not known, or even contemplated, at the time of the dismissal.

Under Regulation 7 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 the dismissal of an employee with one or more years' service is automatically unfair if the principal reason for that dismissal is the transfer itself or a reason connected with the transfer which is not an economic, technical or organisational (‘ETO') reason entailing changes in the workforce.  The Court of Appeal held that the employer's CEO, Mr Baillavoine, had been dismissed to make the business more attractive to a potential buyer.  The dismissal was therefore connected to the transfer, despite the fact that no buyer had been identified. The desire to achieve a sale of the business was not sufficient to establish an ETO reason.