The decision of the Employment Appeal Tribunal (“EAT”) in Manchester College v Hazel and Huggins demonstrates how dangerous it can be harmonising terms and conditions of employment after taking a transfer of staff under TUPE. Manchester College was involved in the provision of offender learning contracts on behalf of the Learning and Skills Council. They successfully bid for new contracts and the employees transferred to them under TUPE.
Following the transfer, the College realised that significant cost savings had to be made and made a request for 300 voluntary redundancies. The College also decided that it needed to make further savings by harmonising terms and conditions of employment across 37 different contracts of employment. This resulted in the employees being asked to accept a pay cut. When they refused, they were dismissed and offered re-employment on new terms. The employees accepted these new contracts of employment but sued for unfair dismissal on the contract which had been terminated.
Both the Tribunal and the EAT upheld the claims. They found that the dismissals had been caused by the refusal of the employees to agree the new terms of employment and the changes that the employer attempted to impose were related to the TUPE transfer (an attempt to harmonise and decrease salaries following the transfer).
The College had argued that there could be no connection to the TUPE transfer because non transferring employees were also affected. They also argued that the dismissals were for an economic, technical or organisation reason entailing changes in the workforce (“ETO”). The Tribunal rejected both arguments. The fact that non transfer employees were also affected did not stop the dismissal being transfer related in relation to those employees who had been TUPE’d over. As far as the ETO argument was concerned, the Tribunal and the EAT said that a change of salary is not a change in the workforce. Accordingly, the dismissals were automatically unfair as they were contrary to TUPE. The College was ordered to re-instate the employees on their original salary (the Tribunal dismissing the College’s arguments that this would cause difficulties with trade unions and other members of staff who had accepted the lower salary and not brought claims).
- It is extremely difficult to successfully change terms and conditions of employment following a TUPE transfer.
- It is also important to note that the prohibition on TUPE related changes applies any time post transfer. For instance, even if changes are made some 10 years following the transfer then, if they are related to that transfer, they are not permitted.
- Employers seeking to change terms and conditions of employment post TUPE transfer will need to be sure the employees agree to the changes and that they are unconnected to the TUPE transfer or that the employer has a genuine ETO redundancy reason that will be upheld by a Tribunal.