The crucial question

CAB Automotive Ltd v Blake and ors

Regulation 8(1) of TUPE 1981 (now regulation 7 (1) of TUPE 2006) states that it is unfair to dismiss an employee before or after a transfer if the reason (or main reason) for the dismissal is connected with the transfer. In CAB Automotive Ltd v Blake and ors (IDS 851), the Employment Appeal Tribunal (EAT) said that it has to be “the” reason as opposed to just “a” reason to fall within the regulations.

Basic facts

Interiors Ltd went into administration on 4 May 2005 following the financial collapse of a major client. On 5 May 2005 the administrator, Mr Mitchell, told Mr Griffiths, a manager, that “his role was to tidy up the business to sell to somebody else”.

At a meeting on 6 May 2005 Mr Mitchell advised the company that the business needed to be “cut back to the bone”. On his recommendation, 72 staff were dismissed that day (including Mr Blake and his colleagues), keeping only employees “involved in the operational needs of the sustainable business”.

Just before Interiors Ltd went into administration on 3 May 2005, RDS Automotive Ltd (another company in the same group) which had a contract with Jaguar/Land Rover to design the inside of the new Land Rover Defender also went into administration. It made all its employees redundant.

There was an overlap in the personnel of the management in Interiors Ltd and RDS Automotive Ltd and as a result they entered into negotiations on 7 & 8 May 2005 to form a bid for the Land Rover Defender contract. The management formed a new company called CAB Automotive Ltd and their business plan was accepted by Jaguar/Land Rover on 12 May 2005. On 13 May 2005 CAB Automotive Ltd took on the remaining workforce at Interiors Ltd.

On 3 August 2005, Mr Blake and his colleagues lodged claims of unfair dismissal against Interiors Ltd and in the alternative against CAB Automotive Limited. They argued that their employer had known the identity of the transferee when they were dismissed, and that the directors of Interiors Ltd had induced Mr Mitchell to reduce the workforce to allow them to buy a “slimmed-down company”.

Tribunal decision

The Tribunal decided that the dismissals were automatically unfair under regulation 8 (1) TUPE 1981. The tribunal stated that it did not matter that the transferee could not be identified on the date of the dismissals, the dismissals were still connected with a transfer.

EAT decision

The EAT said that the tribunal had failed to “adequately consider the question necessitated by the terms of regulation 8(1): that is whether the transfer or a reason connected with it was the reason or principal reason for the Claimants’ dismissal”.

Instead, the tribunal had asked whether the dismissals were “connected with a transfer”. This was not the same question, said the EAT and lacked “the essential requirement of identifying the reason for dismissal.