Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). employers cannot vary a contract if the reason for the variation is the transfer. In Tabberer and ors v Mears Ltd and ors, the Employment Appeal Tribunal (EAT) held that employers can, however, vary a contract if the relevant contractual term is outdated and unfair.

Basic facts

The claimants were all electricians who had originally been employed on a contract with Birmingham City Council.  Following a number of TUPE transfers, their employment transferred to Mears in April 2008.

As Council employees, they had received a payment known as the Electricians Travel Time Allowance (ETTA) to compensate them for the loss of an historic productivity bonus caused by the need to travel to different depots. Mears argued that as the rationale for paying the allowance no longer applied (there was no longer any productivity bonus and only one depot) and was unfair to the rest of the workforce who did not receive it, the electricians had lost their contractual entitlement to it. Some of the electricians brought claims which were upheld by both the tribunal and the EAT, known as the Salt litigation.

Mears then gave notice that it intended to unilaterally vary the electricians’ contracts by stopping payment of the allowance from 1 September 2012. The claimants objected, arguing that the reason for the variation to their contracts was a relevant transfer for TUPE purposes and therefore void under regulation 4(4) of TUPE.

Relevant law

Regulation 4(4) TUPE states that any “purported variation” of a contract is void if the “sole or principal reason” for the variation is the transfer itself.

Tribunal decision

The tribunal agreed with the company that, as the decision to stop making the payments was because they were outdated, the “operative reason” for the variation of contract was not the transfer itself or a reason connected with the transfer. As such, the decision to vary the contract was different from the earlier litigation and was taken for different reasons.

The claimants appealed on the basis that the tribunal’s judgment ignored the fact that the entire subject matter in Salt was the 2008 TUPE transfer to Mears.  It was therefore perverse for the tribunal to find that the company’s reason for the unilateral variation was not connected to it.

EAT decision

The EAT held that the first thing that the tribunal had to do was to ascertain, as a question of fact, what caused the employer to do what they did. In answering this question, the tribunal had found that the Salt litigation was not inextricably linked with the transfer, but rather that it had formed the context for the company’s decision to get rid of a contractual entitlement to an outmoded payment. It was not therefore an attempt on the part of Mears to harmonise terms and conditions, post transfer, but instead was motivated by the need for fairness across different job groups, regardless of the transfer.

The tribunal had clearly found that the reason, or principal reason, for the company’s decision to ensure that contractual entitlement to ETTA was brought to an end was because it believed that it was outdated. This did not therefore create a connection to the transfer and was a conclusion that the tribunal was entitled to reach.

Comment

This case is a reminder that a post-transfer variation to terms and conditions will only be void under TUPE if the sole or principal reason for the variation was the transfer.