Can an Employer Remove an Outdated Contractual Travel Allowance Following a TUPE Transfer?

Legal Background

Under regulation 4(4) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) where TUPE applies, any changes to transferring employees' contracts of employment will be void if the sole or principal reason for the variation is the transfer.

However, there are some exceptions to this. For example, a contractual variation will be permitted if it is unrelated to the transfer, if it is for an economic, technical or organisational reason entailing changes in the workforce (where the employer and the employee agree the variation) and if the contract of employment permits the variation. 

Tabberer v Mears

The claimants were electricians who were paid an Electricians Travel Time Allowance (ETTA). They had been paid this allowance since 1958 and payment had continued through various transfers until they transferred to Mears Ltd (Mears) in April 2008.

Historically, the ETTA had been paid to the electricians by the local authority to compensate them for the loss of a productivity bonus caused by the need to travel to different depots. At that time the local authority had 30 to 40 depots but many of these had since been closed, leaving only one in operation at the time of the claim. Productivity bonuses had also been phased out.

In addition to this, certain claimants had in fact not submitted a claim for ETTA for several years and employers prior to the most recent transfer to Mears had also questioned the payments but had not taken it any further.

Initially Mears argued that they were entitled to remove the ETTA because it was not a contractual entitlement. This argument was not successful and therefore Mears gave notice that it was bringing the contractual payment of the ETTA to an end. The Claimants objected, arguing that the removal of the ETTA was connected with the transfer and was therefore void under regulation 4(4) of TUPE.

Employment Tribunal (ET) Decision

At first instance, the ET rejected the claims. It held that the reason for the change to terms and conditions was that the ETTA was considered to be an outdated and unjustified allowance. As a result, the TUPE transfer was not the sole or principle reason for the change. 

EAT Decision

The EAT upheld the ET's decision.

The EAT noted that 'merely because a variation takes place against the backdrop of a transfer does not mean that it is the reason for that variation'. In deciding if the removal of the ETTA was because of the transfer, the EAT held it first had to determine - as a question of fact - what the reason had been and what caused the employer to do what it did?

In answering these questions the EAT determined that the reason for the variation had been because the ETTA was out of date and unjustified. The EAT also held that the fact that previous employers and managers had questioned the payment of the ETTA was relevant as it demonstrated that the reasoning for the removal of the ETTA did not arise purely because of the transfer. The EAT noted 'although it is right to say that the Respondent was presented with this problem upon the occasion of a transfer, that simply explains how the Respondent came into the picture at all; it does not explain why it questioned the payment of ETTA.'  

Best Practice

This case illustrates the importance of the reasoning behind changes to terms and conditions after a TUPE transfer.

It should not been seen as a "green light" for making variations to employees' terms of employment following a TUPE transfer, as it was decided on very particular facts and there is no guarantee that similar circumstances will lead to the same result.

For more information, please contact Eleanor Boyd in our Employment Law team on 0207 665 0940.