Is the dismissal really a “TUPE dismissal”?

Mrs Kaur worked as a cashier for H&W Wholesale Ltd (H&W), a company which sold wine wholesale. This business had transferred and changed over time to various entities, and Mrs Kaur had been employed since 2002. Throughout this period, the directors of the wine seller were always Mr Hare and Mr Windsor. In April 2014, a separate company, Hare Wines Ltd, whose director was Mr Hare, started trading. In December 2014, a decision was made for Hare Wines Ltd to take over H&W. Subsequently, Mr Windsor, the outgoing director, began consulting with the employees of H&W.

During her time at H&W, Mrs Kaur had a strained working relationship with a colleague, Mr Chatha. Mr Chatha was due to become a director of Hare Wines Ltd following the TUPE transfer.

Mrs Kaur had a consultation meeting on 9 December 2014. At the end of the meeting, her employment was terminated, and a letter was written and sent to her stating that ‘due to unforeseen circumstances…our business will cease to trade. As a result we will unfortunately have to terminate your employment as from today’.

Mrs Kaur brought a Tribunal claim for redundancy and notice pay against both H&W and Hare Wines Ltd. The defences were that H&W had ceased trading and that Mrs Kaur had never been an employee of Hare Wines Ltd. Mrs Kaur was given leave to amend her claim to include an automatic unfair dismissal claim. At the hearing, which the Respondent companies did not attend, the ET found in her favour, based on the evidence that H&W and Hare Wines did not want her to transfer due to her poor relationship with Mr Chatha. But for her dismissal, she would have transferred.

Hare Wines Ltd appealed to the EAT, arguing that the reason for the dismissal was entirely personal to Mrs Kaur and so it could not relate to the transfer. The EAT dismissed the appeal on the basis that:

• TUPE is designed to protect employees. New categories of defence should not be introduced without caution.
  
  
• The proximity of the dismissal to the transfer is an important consideration when determining the reason for dismissal.
  
  
• Where an employer had taken action to resolve difficulties by dismissing an employee when a transfer was taking place, the tribunal was allowed to conclude that the reason for dismissal was the transfer.

Hare Wines Ltd then appealed to the Court of Appeal. The basis of this appeal was that proximity alone was not a reason to assume that dismissal was linked to the transfer and that the Judges had wrongly concluded that this was the case. In its findings, the Court of Appeal noted two relevant factors. First, the dismissal took place on the day of the transfer. Whilst not conclusive, it was strong evidence in Mrs Kaur’s favour. Secondly, the relationship between Mrs Kaur and Mr Chatha had been strained for a long period of time. At no point previously had H&W sought to terminate her employment. As such, the Court of Appeal found that the principle reason for dismissing Mrs Kaur was due to the TUPE transfer.

What does this mean for you or your business, and what should you be doing now?

This case is a useful illustration of the risks that can arise if you want to dismiss during or around a TUPE transfer. In many cases parties may be seen as “cherry picking” certain employees to transfer, which could then lead to a finding of automatic unfair dismissal. Further, the Courts are heavily influenced by the proximity of the dismissal to the transfer. In this case, the dismissal was effective just two days before the transfer. Therefore, as an employer, in the event that you wish to dismiss an employee around this time, be wary of the risk and make sure you follow a fair and proper process. It is also important to paper-trail this to document the process and prove that it is sufficiently removed from the TUPE transfer.

This case could have raised an interesting question on defences against automatically unfair dismissals. Hare Wines Ltd strongly argued that the reason for dismissing was solely due to the poor working relationship between the Claimant and the Respondent. This could count as a fair reason to dismiss for ‘some other substantial reason’ in an ordinary unfair dismissal. However, if linked to a TUPE transfer, the dismissal must be for an economic, technical or organisational reason entailing changes in the workforce at the moment. It is not known whether Hare Wines Ltd will consider appealing again to the Supreme Court, but watch this space for any updates.

Recommended Reading

The link to the case from the EAT can be found HERE.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.