This is a matter which was considered by the Court of Appeal in the case of Hare Wines Ltd v Kaur (2019).
Mrs Kaur worked at H & W Wholesale Ltd for over 10 years as a cashier. Her employer was a wine and beer wholesaler. During her employment it was noted that Mrs Kaur had an ongoing difficult working relationship with another colleague, Mr Chatha. However, no action had been taken by the employer to resolve the issues between Mrs Kaur and Mr Chatha. The business was sold to Hare Wines Ltd due to financial difficulties and Mrs Kaur’s employment was terminated on the day of the transfer. All other staff transferred to Hare Wines Ltd.
Mrs Kaur brought a claim for automatic unfair dismissal on the basis that the reason for her dismissal was that Hare Wines Ltd did not want her employment to transfer to them due to her tense relationship with Mr Chatha, who, incidentally, would have become her manager post transfer.
Hare Wines Ltd, however, argued that Mrs Kaur had informed them that she was not happy to work for them and they therefore accepted this as an objection to the transfer which they deemed to be a resignation. This was simply not the case.
The Employment Tribunal found, as part of the evidence, a letter from Hare Wines Ltd to Mrs Kaur confirming her termination. It was also noted part of her notice pay had already been paid. The Employment Tribunal came to the decision that Mrs Kaur did not object to the transfer and therefore ruled that her dismissal was automatically unfair on the basis that the real reason for her dismissal was due to the strained working relationship with Mr Chatha.
Hare Wines Ltd appealed to the Employment Appeal Tribunal who argued that whilst it was ruled by the Employment Tribunal that the reason for Mrs Kaur’s dismissal was due to her strained working relationship with another colleague, it could not be concluded that the reason for the dismissal was the transfer. This argument was rejected by the Employment Appeal Tribunal. There had been ongoing problems between Mrs Kaur and her colleague for some time and Hare Wines Ltd used this as a reason to address the issues conveniently at the time of the transfer. The Court of Appeal was also in agreement with this decision. Had it not been for the transfer, Mrs Kaur’s employment would not have terminated.
Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), a dismissal is deemed to be automatically unfair where the sole or principal reason for the dismissal is the transfer itself (providing there is no ETO (economic, technical or organisational) reason for the dismissal). In instances where an employer dismisses an employee due to other ongoing issues such as conduct, at the time or close to the time of a TUPE transfer, the Employment Tribunal are likely to identify that the real reason for dismissal is the transfer.
Where a dismissal is necessary close to the TUPE transfer, employers should strongly consider the reason for the dismissal and whether it really is necessary to dismiss the employee at this stage. Let’s not forget that in event of a sale of a business, the purchaser, as part of the due diligence process, will need to be advised of any dismissals and will more than likely seek protection in the sale agreement for any liabilities that could pass to them on completion of the sale.
For advice on any of the above or TUPE-related matters, please contact a member of the Langleys Employment Team.