The Court of Appeal has upheld a decision that the dismissal of an employee immediately before a Transfer of Undertakings (Protection of Employment) (TUPE) Regulations transfer was automatically unfair because the principal reason had been the transfer. The Court of Appeal rejected the transferee employer's contention that the reason for the dismissal was personal to the employee's circumstances and so unrelated to the transfer.
Ms Kaur was employed by a wine and beer wholesale business, H&W Wholesale Ltd. When the business got into financial difficulties, Hare Wines Ltd agreed to purchase it.(1)
The employment contracts of all H&W's existing employees, apart from Kaur, were transferred to Hare. Kaur's employment was terminated shortly before the transfer. H&W claimed that her dismissal was because the business was ceasing to trade, but Hare contended it was because she had objected to the transfer.
Kaur initially brought proceedings claiming redundancy pay and notice, but later amended this to include an unfair dismissal claim. She asserted that the principal reason for her dismissal had been the transfer of the business; therefore, it was automatically unfair under Regulation 7 of TUPE. Hare's defence was that Kaur had objected to the transfer and thus any liability for her dismissal remained with H&W.
The main issue for the employment tribunal to resolve was whether Kaur had objected to the transfer. She claimed that her manager did not want her to transfer because they had a strained relationship and thus Hare did not want her to transfer. The employment tribunal preferred Kaur's evidence and concluded the factual dispute in her favour, holding that she would have transferred but for her dismissal. It followed that the reason for the dismissal had been the transfer.
Hare appealed to the Employment Appeal Tribunal (EAT), arguing that the reason for the dismissal had been entirely personal to Kaur and did not relate to the transfer. The EAT dismissed the appeal and upheld the employment tribunal's finding that the reason for the dismissal had been the transfer (for further details please see "EAT finds that pre-transfer dismissal was by reason of transfer and automatically unfair".)
Hare made a further appeal to the Court of Appeal, which was also dismissed. The Court of Appeal said that Hare had faced the following difficulties:
- H&W had given a false reason for Kaur's dismissal. The Court of Appeal ruled that the employment tribunal had been entitled to find on the evidence that she had not objected to the transfer. There could be no appeal from that finding.
- The second difficulty was that the dismissal had occurred on the day of the transfer. The Court of Appeal observed that the proximity of a dismissal to the transfer is an important consideration when determining the reason for it (P Bork International v Foreningen Af Arbejdsledere I Danmark (1989) IRLR 41).
- The third difficulty for Hare was that the poor relationship between Kaur and her manager had existed for some time without H&W seeking to terminate her employment. The fact that H&W dismissed her only at Hare's request gave rise to a strong inference that the principle reason for dismissal had been the transfer (rather than the relationship).
The Court of Appeal rejected the distinction that Hare had sought to draw between:
- a transferee who refuses to take on any of the workforce (which would amount to dismissal by reason of the transfer); and
- a transferee who picks out one or two employees to be dismissed for "purely personal reasons" but takes the rest.
The Court of Appeal noted that neither unfair dismissal law nor TUPE recognise personal reasons as a category. Once it was found that Kaur had not objected to the transfer, the key question was whether she had been dismissed because:
- of her relationship with her manager (with the proximity of the transfer being coincidental); or
- Hare did not want her (the reason for that being that she did not get on with her manager).
The employment tribunal had been entitled to prefer the latter to the former in determining the principal reason for the dismissal.
Dismissals will be treated as automatically unfair if the sole or principal reason for the dismissal is the transfer itself, unless it can be shown that the dismissal is for an economic, technical or organisational reason (ETO) entailing changes in the workforce. Cases will inevitably turn on their own specific facts. However, this case underlines that even where an employer believes it has a non-transfer-related rationale for the dismissal – regardless of whether that qualifies as an ETO reason – caution should be exercised where the dismissal will occur close to the transfer date.
Endnotes
(1) Hare Wines Ltd v Kaur judgment is available here.
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