Two recent cases before the Employment Appeal Tribunal (EAT) have considered whether post-TUPE transfer changes to terms and conditions were connected to the transfer, and thus void under TUPE.
In the case of Smith and others v Trustees of Brooklands College, the claimants were on unusual terms and conditions pre-transfer, as they worked part-time but were paid for full-time hours. They transferred to Brooklands when two colleges merged. The HR Manager at Brooklands, upon noticing the unusual terms, assumed this was a mistake, and entered into consultation with the claimants for their terms to be amended. They reluctantly agreed, but subsequently challenged the changes as being void under TUPE.
The EAT held that the changes were not for a reason connected to the transfer. Instead, the changes were due to Brooklands’ belief that the terms and conditions were a mistake. The tribunal actually found, as a matter of fact, that they were not a mistake. Nevertheless, Brooklands’ belief that they were was the reason for the change. The EAT noted that TUPE did not contain a “but for” test. If it did, these changes would clearly be void, as “but for” the transfer, they would not have occurred. This was not, however, the test. Instead, a tribunal must ask, what was the reason for the change. An assessment must then be made to determine whether this reason was connected to the transfer. In this case, the tribunal correctly assessed that it was not.
Shortly thereafter the EAT issued its decision in the case of Enterprise Managed Services Limited v Dance. In this case, the Respondent, Enterprise Managed Services Limited (EMS) provided appliance maintenance services to Modern Housing Solutions (MHS). Another company (Williams) provided building maintenance services to MHS. Following a re-tender exercise, only one company was to be awarded the contract for both appliance and building maintenance services. Prior to the tender, EMS reviewed employees’ terms and conditions, and introduced performance related pay, in order to meet the productivity requirements of the contract. They won the tender, and inherited Williams’ employees under TUPE. EMS then discovered they would be unable to meet MHS’ productivity targets without having the Williams’ employees on performance related pay, and so sought to make this change. The claimants were dismissed when they refused to accept the changes, and brought claims under TUPE.
The tribunal held, by a majority, that these changes were for a reason connected to the transfer, as the principal reason was to achieve harmonisation of terms, and were thus void. Improved performance of the contract, they felt, was a consequence of the harmonisation, not the reason for it. No economic, technical or organisational reason had been argued by EMS. The minority view however disagreed, and felt they were not transfer related, as the principal reason was to improve the performance of the contract. The EAT has now upheld the employer’s appeal. It noted that the question to be considered by the tribunal was - what was in the minds of EMS when proposing the changes to the Williams’ employees’ contracts? The tribunal had decided this was harmonisation, but this was inconsistent with their finding that harmonisation was driven by the success of the pre-transfer changes in improving productivity. It therefore agreed in principal with the minority view of the tribunal, but remitted the case to be considered again by a fresh tribunal.
Impact for employers
- These cases are both useful for employers, as a reminder that TUPE does not contain a “but for” test in respect of post-transfer changes to terms and conditions. Instead, a tribunal must consider what the reason for the changes was, and then consider whether that reason was connected to the transfer. It was not as simple as asking whether, but for the transfer, would the changes have been made, the answer to which is almost always invariably, no.
- It has long been established that harmonisation will be considered to be a reason connected to the transfer. Whether or not changes are for the purpose of harmonisation, or for some other reason, is essentially a question of fact for the tribunal to determine. Whilst these two cases are helpful, employers should still approach post-transfer changes with care.