Case law update: does a proposed relocation as a result of a TUPE transfer entitle employees to resign and claim constructive dismissal?

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The EAT has agreed with an employment tribunal that a relocation of six miles (in London) because of a TUPE transfer was a 'substantial change in working conditions to the material detriment' of some employees. They were therefore entitled to resign and claim constructive dismissal under the TUPE Regulations.

Background

Where there is a TUPE transfer, employees can claim constructive dismissal:

  • in the normal way where they resign in response to the old or new employer’s fundamental breach of contract; and/or
  • where the transfer ‘involves or would involve, a substantial change in working conditions to [their] material detriment’.

In the case of Abellio London Ltd v Musse and others, the Employment Appeal Tribunal (EAT) recently looked at this second level of protection offered by TUPE.

Facts

Five employees were employed by CentreWest as bus drivers on the 414 route based at its Westbourne Park depot in West London. In November 2009, the Transport for London contract to run the 414 route transferred from CentreWest to Abellio London Ltd (Abellio) who operated instead from a Battersea depot. The parties accepted TUPE applied.

The claimants had concerns about the new depot location, which would mean that their commute was extended by between one and two hours and would therefore affect their domestic arrangements. They all resigned. One of the five, Mr Musse, resigned to CentreWest prior to the transfer and the remaining four resigned to Abellio on the day of the transfer. All of them complained to an employment tribunal of unfair dismissal against both CentreWest and Abellio.

The employment tribunal upheld the claims. It found that the claimants were all constructively dismissed because there was a substantial change to their working conditions to their material detriment.

CentreWest and Abellio both appealed against the decisions on various grounds. One of which concerned the meaning of ‘material detriment’, and is of particular interest because there have been very few cases to date on this issue.

EAT judgment

The EAT allowed CentreWest’s appeal against the decision relating to Mr Musse (but remitted his case to another tribunal hearing) but dismissed the appeals by Abellio.

Meaning of ‘substantial change to working conditions to the employees’ material detriment’

The EAT referred to one of its previous judgments where it had held that:

a) whether there has been a substantial change in working conditions for the purposes of TUPE is a question of fact to be determined with regard to the nature and degree of the change;

b) ‘employee’s material detriment’ needs to be considered from the employee’s viewpoint and if the employee considered the change detrimental, whether that was a reasonable standpoint; and

c) a detriment is material if it is more than trivial or fanciful.

In this case, the EAT held that the tribunal had been entitled to conclude that the relocation from Westbourne Park to Battersea involved a ‘substantial change’. Whilst the move was only six miles, it involved a change from north to south of the river in London. The tribunal had made findings of fact that each of the claimants regarded the change as detrimental. The tribunal’s decision that the detriment was ‘material’ was justified as it had found that the individuals’ commute would be extended by between one and two hours.

Mobility clause

The EAT held the tribunal had been entitled to find that there was a breach of contract. Although there was a mobility clause in the drivers’ contracts with CentreWest, this did not extend to Abellio’s Battersea depot.

Comment

This case is of interest as it looks in some detail at the additional protection given to employees in the context of a TUPE transfer to resign in response to ‘a substantial change to the employee’s working conditions to their material detriment’.

Practically speaking, whether you are an outgoing or incoming employer, this EAT judgment has ramifications for you. In a nutshell, it means that employees can now fairly easily satisfy the definition of ‘material detriment’ and it therefore increases the risk of an employee successfully claiming constructive dismissal in a TUPE situation.

The TUPE Regulations also render a dismissal of an employee before or after a transfer automatically unfair where it is:

a) by reason of the transfer itself; or

b) for a reason connected to the transfer that is not an economic, technical or organisational reason entailing changes in the workforce (ETO reason).

A point to remember, although not part of the appeal in this case, is that a change of location will not of itself constitute an ETO reason unless it is accompanied by a change in the number or functions of employees.

TUPE is a complicated area of law. So complicated, in fact that we think that the EAT itself made a mistake with one aspect of this judgment regarding whether and in what circumstances the transferor or transferee will be liable for the resulting claims. The lesson? Always ensure you seek advice from EEF when you are in a situation which may trigger the TUPE Regulations.

read more about the case


Considering making changes to terms and conditions?

This case shows how changes to terms and conditions can inadvertantly occur as part of the TUPE process. But many employers will want to consider making intentional changes to terms and conditions to help their business through challenging times.

Changes in working hours or shift patterns, pay arrangement or the removal or reduction of benefits all potentially involve changes to employees' terms and conditions.

Join us at a highly interactive and practical workshop to gain confidence in effecting contractual change and 'flexing' your employees' existing terms and conditions.

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