In Hare Wines Ltd v Kaur, the Court of Appeal (CA) held that a dismissal which occurred two days before a TUPE transfer, was TUPE related.
Whilst a poor relationship had subsisted for some time between the employee and the director of the transferee company, it was the impending transfer that had triggered the decision to dismiss, and, therefore, the transfer was still the sole or principal reason for dismissal.
Regulation 7 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), provides that, where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of Part X of the 1996 Act as unfairly dismissed if the sole or principal reason for his dismissal is:
- the transfer itself; or
- a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce.
Regulation 4 of TUPE provides that:
- (1) Except where objection is made under paragraph (7), a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer…
- (3) Any reference in paragraph (1) to a person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to a relevant transfer, is a reference to a person so employed immediately before the transfer, or who would have been so employed if he had not been dismissed in the circumstances described in regulation 7(1)…
- (8) Subject to paragraphs (9) and (11), where an employee so objects, the relevant transfer shall operate so as to terminate his contract of employment with the transferor but he shall not be treated, for any purpose, as having been dismissed by the transferor.
The Claimant was employed by H&W Wines Ltd (H&W) as a cashier. She had a strained relationship with Mr Chatha, who was to become a director of the transferee company, Hare Wines Ltd. After H&W ran into financial difficulties, it was decided that it would cease trading and that its business and employees would transfer to Hare Wines Ltd.
Mr Windsor, a director of the transferor employer, met with employees to advise them of their impending transfer. At the Claimant's meeting with Mr Windsor, she was told that her employment was terminated. She received a letter dated the same day stating, "due to unforeseen circumstances concerning the business, we must inform you that our business will now cease to trade. As a result, we will unfortunately have to terminate your employment as of today."
The transfer to Hare Wines Ltd took place two days later, on 11 December 2014.
The Claimant brought claims against both H&W and Hare Wines Ltd (the Respondents) for redundancy pay, notice pay and automatic unfair dismissal by reason of the TUPE transfer.
Employment Tribunal (ET)
The focus at the ET was upon what had happened at the meeting between Mr Windsor and the Claimant.
The Claimant argued that she was dismissed because of the impending transfer and that her contract should have transferred to Hare Wines Ltd under Regulation 4 of TUPE. As a result, the Claimant asserted that she had been automatically unfairly dismissed under Regulation 7(1) of TUPE.
The Respondents' case was that the Claimant had objected to the transfer under Regulation 4(8) TUPE, as she did not wish to work with Mr Chatha following the transfer.
The Employment Judge preferred the Claimant's evidence, finding that she did not object to the transfer and would have been employed immediately before the transfer but for the dismissal on 9 December 2014. Importantly, the Employment Judge held that the reason for the Claimant's dismissal was the transfer.
Employment Appeal Tribunal (EAT)
Hare Wines Ltd appealed to the EAT on the basis that the Tribunal was mistaken in concluding that the transfer was the sole or principal reason for the dismissal. Having found that the Claimant was dismissed because of the difficult working relationship with Mr Chatha, Hare Wines Ltd argued that the ET was wrong to assume that the proximity of the transfer meant that any dismissal would be by reason of the transfer. Alternatively, Hare Wines Ltd argued that there was an error in law in failing to give adequate reasons for the decision.
Choudhury HJ dismissed the appeal, holding that the wording used by the ET clearly showed that it was considering whether the transfer was the sole or principal reason for the dismissal. Further the EAT also noted that, in light of the case of P Bork International v Foreningen Af Arbejdsledere I Danmark  IRLR 41, proximity to the transfer is an important factor to take into account when determining the reason for the dismissal. Importantly, although the difficulties in the relationship between the individuals was described as 'personal', a significant factor was that those difficulties were ongoing. The EAT held that where an employer had not taken action to resolve an ongoing relationship difficult prior to the transfer, but does so only at the point of transfer by dismissing one of the parties in that difficult relationship, it was open to the ET to conclude that the reason for the dismissal was the transfer.
Court of Appeal (CA)
Pursuing its appeal to the CA, Hare Wines Ltd continued to argue that, once a finding had been made that the reasons for the dismissal were personal to the Claimant (and therefore existed independently of the transfer), it was not open to the Employment Judge to conclude that the sole or principal reason for the dismissal was the transfer.
Bean LJ, dismissing the appeal and giving the lead judgment, held that there were three 'serious obstacles' to overcome to reverse the decision:
- The first was that the Employment Judge had found the facts of the 9 December meeting to be as the Claimant had described them, and there could not be any appeal from those factual findings.
- The second was that the proximity of the transfer was 'strong evidence' in the Claimant's favour that the transfer was the sole or principal reason for her dismissal.
- Thirdly, the poor relationship between Mr Chatha and the Claimant had endured for some time without H&W seeking to terminate her employment.
Bean LJ highlighted that the transferor (H&W) had terminated her employment immediately before the transfer at the request of the transferee (Hare Wines Ltd). The inference that the transfer (rather than the poor relationship in isolation from the transfer) was the sole or principal reason for her dismissal was therefore 'very strong indeed.' There was, in Bean LJ's view, no distinction between a transferee who refuses to take on any of the existing workforce (which would be a dismissal be reason of the transfer) and one who picks out one or two individuals to be dismissed but takes the rest.
Agreeing, Underhill LJ put it: "The problems between [the Claimant] and Mr Chatha had been going on for some time, but there was no evidence that until the transfer they were regarded as cause for dismissal. Once the Judge has rejected Mr Windsor's evidence as to the reason for the dismissal the only possible inference for her other findings was that [Mr Windsor] believed…that [the Claimant's] problems with Mr Chatha, which had been tolerable pre-transfer, would not be tolerable post-transfer. In my view, that means that the transfer was not simply the occasion for her dismissal but was, if not the sole reason at least the principal reason for it: it was the transfer that made the difference between the problems being treated as a cause for dismissal and not."
This decision is perhaps unsurprising, as it is clearly in line with the stated purpose of TUPE to protect employment in transfer situations. Dismissing an employee two days before a transfer and then attempting to assert that it was not transfer-related was always a bit of a tall order. At the very least, it is advisable to obtain clear written authority from any employees wishing to object to the transfer, to evidence that this is their confirmed preference.
Indeed, one of the arguments advanced by the Claimant's counsel at the EAT was that any decision to allow a dismissal for 'purely personal reasons' (as the Respondents' had argued the reason for the dismissal to be), would open up the floodgates for employers to use this as a reason to dismiss employees pre-transfer as it suited them. 'Purely personal reasons' are not a valid reason to dismiss under either unfair dismissal law or under TUPE. In this ruling, the CA has now closed down that line of argument and has reinforced that proximity of the dismissal to the transfer is strong evidence in favour of the dismissed employee.
Ultimately, this case reinforces the view that it is not open for an employer to decide which employees are 'problematic' and insist that they are dismissed prior to transfer. TUPE operates to transfer all employees assigned to the organised grouping of resources of employees, with the result that that any difficulties in relationships should then be resolved via an appropriate process after the transfer.
This article was written by Dr Philippa Carrington, a member of the Employment Team in Manchester.