Employment Flash - 30th July 2010

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TUPE, ETO, consultation and unfair dismissal...

Nationwide Building Society v Benn & others [2010] UKEAT 0273 09 JOJ

21 (or more) Employees transferred from P to NBS. Employees engaged in advising on financial services products. Changes to working terms and conditions only affected transferees and not the existing workforce.

ET determined that 2 sample claimants, Bo and S-G, had been unfairly dismissed and also found that the dismissals had been for an ETO under 7(2) TUPE 2006 and therefore not automatically unfair. The ET had relied on amongst other things a failure under 13(6) TUPE 2006 to consult employee representatives in relation to their finding of unfair dismissal.

The ET were wrong to do so: a) the ET1s did not refer to it; b) it was not in the agreed list of issues; c) it was not raised at the hearing; d) neither party was given the opportunity to address the ET on it. Tarbuck v Sainsbury's Supermarkets Ltd [2006] IRLR 664 although a discrimination claim, set out a self-evident proposition that a point should be identified so that the parties can have the opportunity of addressing the ET.

The Claimants had no standing to bring a claim for breach of 13(6) as the obligation to consult is with the employee representatives and such a failure can only be pursued by the representatives under 15(1)(b)-(d) TUPE 2006 [sub-para 15(1)(a) did not apply on the facts]. Though Mercy v Northgate HR Ltd [2008] ICR 411 dealt with the 1981 regulations, the principle relied on there [the relevant statutory wording indicated that a failure to provide information was a collective matter rather than an individual matter] applied to TUPE 2006.

The EAT upheld the ET's view that the relevant transfer of undertaking did involve a substantial change in working conditions to the material detriment of the Claimants such that they were entitled to treat their contracts as at an end. The change involved: a) diminution in the skills and responsibilities that applied to the roles at PBS, pointedly some Claimants would be unable to sell products for which they were licensed so would be losing qualifications in that respect; b) change to the bonus scheme meant a substantial reduction in earnings and earning capacity. A 4(9) TUPE 2006 dismissal had taken place.

On ETO: the Claimants accepted that harmonisation of roles, functions and remuneration may amount to an organisational reason. But as the changes only affected transferees and not the existing workforce they did not affect the workforce as a whole, see Berriman v Delabole Slate Ltd [1985] ICR 546, "workforce" connotes the whole body as an entity; changes to individuals in the workforce are not changes in the workforce itself provided the overall numbers and functions of the employees taken as a whole remain unchanged. The EAT took the view that 7(2) TUPE 2006 does not state that the organisational reason must entail changes in the entire workforce; the organisational change had affected the transferees and that was sufficient on this occasion to conclude that the dismissals were for ETO reason.

More on TUPE can be found in TUPE: pitfalls, perils and practice by Simon Anderson and Catherine Knowles