Case update (1): TUPE – Beware of automatic unfair dismissal

What do we already know?

We updated you in our October 2018 Newsletter Case update 1: TUPE – beware of automatic unfair dismissal that the EAT held that the dismissal of an employee immediately before a TUPE transfer was automatically unfair, even though the dismissal was due in part to the employee’s personal circumstances.

What’s new?

The Court of Appeal has confirmed the EAT’s decision.

Summary: Was the dismissal of an employee on the day of a TUPE transfer automatically unfair, despite being due in part to the employee’s personal circumstances?

Yes, held the Court of Appeal in Hare Wines Ltd v Kaur available here.

Background: The dismissal of an employee of the transferor or transferee is automatically unfair if the sole or principal reason for the dismissal is the transfer.

Whether a dismissal is by reason of the transfer is a question of fact for the Tribunal to decide in the light of all the circumstances. If the employer can show that the dismissal would have occurred wholly independently of the transfer, and is therefore unrelated to the transfer, the dismissal is not automatically unfair and fairness will be considered in accordance with normal principles.

Facts:  The employee, Ms Kaur, was a cashier working for H&W Wholesale, the employer. Ms Kaur was dismissed the day that the stock and employees of the employer were transferred under TUPE 2006 to Hare Wines.

Ms Kaur brought a Tribunal claim for automatic unfair dismissal because the sole or principal reason for her dismissal was the transfer. Ms Kaur argued that she had not been allowed to transfer because of a strained working relationship with her colleague, Mr Chatha.  On the day of the transfer, Ms Kaur had met with a director of H & W, Mr Windsor. Ms Kaur said that Mr Windsor had told her that she was going to be dismissed because Mr Chatha and Hare Wines Ltd did not want her.

Hare Wines Ltd said that at the meeting Ms Kaur had objected to the transfer because she did not want to transfer because of her working relationships with Mr Chatha and another male colleague.  Hare Wines said that Ms Kaur’s employment had been ended because she had objected to the transfer.

The Tribunal held that Ms Kaur’s dismissal was automatically unfair because the reason for the dismissal was the transfer. It accepted that Ms Kaur had not objected to the transfer and would have transferred but for her dismissal. As such, it concluded Ms Kaur had been dismissed because Hare Wines had anticipated that there would be ongoing difficulties in the working relationship between her and Mr Chatha and did not wish her contract of employment to transfer.

Hare Wines appealed to the EAT. Hare Wines’ main argument was that the reason for the dismissal was entirely personal to Ms Kaur and did not relate to the transfer.

Court of Appeal decision

The EAT dismissed the appeal and Hare Wines appealed to the Court of Appeal.

Hare Wines argued that Ms Kaur’s dismissal was not automatically unfair: it said that the reasons given by the Tribunal for the dismissal were “purely personal reasons“ and not consequent on the TUPE transfer.

The Court of Appeal agreed with the EAT and dismissed the appeal. The Court of Appeal said that, once the Tribunal had found that Ms Kaur had not objected to the transfer, the central question was i) whether she had been dismissed because of her relationship with Mr Chatha, and the proximity of the transfer was coincidental or ii) whether she had been dismissed because Hare Wines did not want her, the reason being that she did not get on with Mr Chatha. It was for the Tribunal to determine which of those was the sole or principal reason for the dismissal. On the evidence, the Tribunal had been entitled to prefer the second of these reasons. The reason for the dismissal was the transfer.

Implications:  Employers should act with caution if dismissing someone around the time of a TUPE transfer (unless there is a genuine economic, technical or organisational reason for the dismissal).

The fact that the dismissal is around the time of the transfer does not dictate that the principal reason for the dismissal is the transfer, but it is persuasive.  I.e. if there is no other good explanation for the timing of the dismissal, it is likely that a Tribunal will conclude there is a link with the transfer. The closer the dismissal is to the transfer date, the greater the risk will be of an automatically unfair dismissal.

On a more positive note, an example of a dismissal which is not related to the transfer could be one at the end of a long prior disciplinary process, which just happened to expire a few days before the transfer.