EAT confirms employee was dismissed after objecting to TUPE transfer
In a recent decision, the Employment Appeal Tribunal (EAT) has confirmed that an employee who objected to a TUPE transfer involving a detrimental change in his working conditions was dismissed by the transferor.
Background
In London United Busways Ltd v De Marchi and anor, the claimant was a bus driver whose route operated out of a garage 15 minutes from his home. His employer, London United Busways Ltd (LUB), lost the contract for this route to Abellio London Ltd (AL), meaning the claimant’s employment was set to transfer to AL under TUPE.
After the transfer, the claimant’s route would operate from a different garage over an hour away from his home. The claimant objected to the transfer and requested redundancy. LUB rejected this, asserting there was no redundancy situation because his role still existed. During consultation, LUB offered the claimant three options:
- Transfer to AL under TUPE
- Remain with LUB on amended terms (including a longer maximum duty time)
- Resign
The claimant did not agree to the amended terms, continued to object to the transfer, and his employment with LUB ended in November 2019. He brought claims for unfair dismissal and TUPE-related claims, requiring him to establish how his employment had been terminated.
Employment Tribunal decision
The Employment Tribunal found that the claimant had been dismissed by LUB. It reasoned that the claimant’s objection to the transfer prevented his employment from transferring to AL. By attempting to transfer him despite his objection, LUB had dismissed him. LUB appealed to the EAT.
EAT decision
The EAT agreed with the Tribunal’s conclusion that the claimant had been dismissed, but used different reasoning, focusing on the interaction of regulations 4(7), 4(8), and 4(9) of the TUPE Regulations.
Under regulation 4(9), where a TUPE transfer involves a substantial change in working conditions that is to the material detriment of an employee, that employee can treat their contract as terminated. If they do so, this is deemed to be a dismissal for TUPE purposes.
The EAT explained the following key points:
- When an employee objects to a transfer under regulation 4(7) because of substantial changes causing material detriment, the effect of their objection is to prevent the transfer of their contract to the new employer (the transferee).
- In these circumstances, regulation 4(8) automatically terminates the employee’s contract with the transferor. The employee is then treated as having been dismissed by the transferor, even though no explicit dismissal took place.
The EAT emphasised that the claimant’s objection was reasonable because the transfer would have resulted in a substantial and detrimental change to his working conditions, particularly the longer commuting time. As a result, the employment did not transfer to AL, and LUB was liable for the dismissal.
While the EAT reached the same conclusion as the Tribunal, its analysis clarified the importance of distinguishing between a general objection to a TUPE transfer and one based on detrimental changes under regulation 4(9).
Practical learning points
This decision highlights that where an employee objects to a TUPE transfer, this can result in a dismissal by the transferor if the transfer would involve a substantial, materially detrimental change in working conditions. In these circumstances, it will be the transferor (and not the transferee) who is technically liable for the dismissal. This is the case even though the transferee will be the party to determine any new detrimental working conditions.
Employers may wish to consider the commercial terms agreed between the transferor and transferee in TUPE transfers to ensure they include appropriate indemnities or protections. This can help mitigate the risk of disputes and liabilities arising from objections based on substantial changes to working conditions.