It is unfair under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) to dismiss an employee if the reason is connected with the transfer and is not an ETO reason entailing changes in the workforce. In Manchester College v Hazel, the Employment Appeal Tribunal (EAT) said that dismissing employees to harmonise staff terms and conditions could not constitute an ETO reason.

Basic facts

After successfully bidding for a number of Offender Learning contracts in six regions in 2009, Manchester College discovered some hidden costs which it had not noticed in the due diligence exercise prior to the transfer of the contracts.

It therefore initiated a staff restructuring exercise to make efficiency savings which involved a number of voluntary redundancies. Following that, it decided to harmonise the terms and conditions of all its staff.

Ms Hazel and Ms Huggins (the claimants), whose employment had transferred over to the college when it won the contracts, were told in June 2010 that although their posts would not be made redundant, they would have to accept a cut in salary as part of the harmonisation process.

The claimants refused and were dismissed. They were re-engaged on new contracts, the terms of which included the reduction in pay. They remained in employment but brought claims that they had been unfairly dismissed from their old contracts, contrary to regulation 7 of TUPE.

Relevant law

Regulation 7 states that it is unfair to dismiss an employee if the reason for their dismissal is connected with the transfer and is not for an economic, technical or organisational (ETO) reason entailing changes in the workforce. For an ETO reason to “entail changes in the workforce”, in the context of dismissals connected to a transfer, there must be a change in the job functions, or numbers, of the workforce as a whole.

Tribunal decision

The tribunal found that the reason for their dismissal was their continued objection to the cut in pay and the college’s decision that it had to impose the new terms, despite their objections.

It held that this was connected with the transfer and was not for an ETO reason entailing changes in the workforce. The redundancy process had ended by that stage and the harmonisation process (which was separate from it) did not entail any changes in the workforce.

EAT decision

The EAT agreed. The tribunal had found that the reason for the dismissals was the women’s objection to the reduction in pay and that this reason was connected to the transfer.

The EAT concurred with this and so went on to consider whether this was an ETO reason entailing changes in the workforce. As the college had already conceded that there were no changes as far as job “functions” were concerned, the only issue to decide was whether there had been a change in numbers.

As the new terms offered to the claimants did not involve a change to the numbers in the workforce, the dismissals were automatically unfair. It agreed the redundancy process which had been carried out previously was complete and the harmonisation exercise that led to the women’s dismissal was entirely separate from that.

Finally, the EAT also agreed that the appropriate remedy was re-engagement on the women’s new contracts but on their old rates of pay.