Nationwide Building Society v Benn and ors
Under the 2006 Transfer of Undertakings (Protection of Employment) Regulations (TUPE), employees can claim unfair dismissal if their working conditions are downgraded following a transfer. In Nationwide Building Society v Benn and ors, the Employment Appeal Tribunal (EAT) said that the employees had been entitled to claim they had been dismissed, but the dismissals were not automatically unfair as they were for a valid economic, technical or organisational reason entailing changes to the workforce, even though only some of them were affected.
Basic facts
As part of a TUPE transfer, Mr Benn and his colleagues transferred from the Portman Building Society to the Nationwide Building Society in August 2007.
They complained that, following the transfer, their jobs were altered to their detriment. Their job role and responsibilities were downgraded and the Nationwide bonus scheme was substantially less beneficial to them. They said that this amounted to a breach of trust and confidence and that the changes to their terms and conditions constituted fundamental breaches of their contract.
They resigned and brought claims of unfair dismissal, arguing that the transfer involved or would involve a substantial change in working conditions to their detriment pursuant to regulation 4 (9) of TUPE and constructive dismissal.
Relevant law
Regulation 4(9) TUPE states that a resignation has to be treated as a dismissal if a “relevant transfer involves or would involve a substantial change in working conditions to [his] material detriment ....".
This right exists in addition to the right to resign in response to a fundamental breach of contract and claim constructive dismissal.
Tribunal decision
The tribunal found that the claimants had been dismissed pursuant to regulation 4 (9) TUPE and constructively dismissed.
Furthermore although the tribunal found that the reason for the dismissals were for an 'economic, technical or organisational reason entailing changes in the workforce' (known as the ETO reason) and therefore not automatically unfair, it held that they were procedurally unfair.
The tribunal said this was because the employer had failed to comply with regulation 13 (6), which states that employers must consult over measures they envisage taking in relation to a transfer.
EAT decision
The EAT agreed with the tribunal that the employees had been unfairly dismissed pursuant to regulation 4(9) and had been constructively dismissed.
However it concluded that the tribunal could not rely on a breach of regulation 13(6) to find the dismissals had been unfair as no claim has been made alleging a breach of the regulation, nor was it raised by either the claimants or the tribunal at the hearing.
In any event, the EAT pointed out that individual employees cannot bring a claim for a failure to consult when there are “appropriate representatives” either of a recognised trade union or who are elected or appointed specifically for that purpose, or by the employer for some other purpose. Only the reps themselves can do that. The EAT therefore remitted the question of the fairness of the dismissals back to the tribunal.
Finally, the EAT held that when employers wants to rely on an ETO reason, they do not need to show it entailed changes to the workforce as a whole. It was enough in this case to show that it applied to the employees who were transferring over and therefore the tribunal had been correct to find the employer had an ETO reason.