Objecting to TUPE transfers

An employee can object to his employment being transferred to a new employer under TUPE. He does not need to give a reason. If he objects then the starting point is that his employment is simply treated as coming to an end on the date of the transfer. This is not viewed as a dismissal and the employee is not entitled to any compensation.

However, there are two important exceptions where an objection by an employee is deemed to be a dismissal:

1. If the employee objects on the basis that he has been constructively dismissed.
2. If the employee objects in response to a substantial change in his working conditions to his material detriment and treats the employment contract as having been terminated.

The second of these exceptions is proving controversial. It has two main elements which have to be satisfied for it to apply:

1. there needs to be a substantial change in working conditions; and
2. the change has to be to the employee’s material detriment.

What does “material detriment” mean?

Last year, in what was viewed as a rather employee-friendly decision (the Tapere case) the Employment Appeal Tribunal said that “material detriment” must be considered from the employee’s perspective (provided that perspective is reasonable). This makes the threshold of showing “material detriment” potentially very low, particularly as a detriment is to be considered material if it is more than trivial. The Tapere decision has now been followed by another decision (Abellio London v Musse) which has confirmed this to be the case.

What about “working conditions”?

The Abellio decision said that “working conditions” should be read as being wider than contractual conditions, leaving open the possibility of employees objecting to changes and being deemed to be dismissed even if their contractual terms remain the same.

What is a “substantial change”?

Whilst this is a question of fact for each Tribunal, in the Abellio case employees objected because they did not want to move the new employer’s site which was all of 6 miles away. The distance was considered by the Tribunal to be a “substantial change”, in part because of the supposed difficulties of travelling from north of the river Thames to south of the river which it was said would add up to 2 hours to the working days of the employees in question.

What does this matter?

Such a deemed dismissal will be automatically unfair unless it is for an “economic, technical or organisational” (ETO) reason “entailing changes in the workforce”. A new employer may have good ETO reasons for say requiring a change of location but may find it more difficult to show that this entails “changes in the workforce” as this requires a change in numbers of staff or at least job functions.

When do employees have to object?

Save in exceptional circumstances, the employee will have to object before the transfer.

Which employer is liable – the old or the new?

The Abellio case found the new employer (the transferee) to be liable for the deemed dismissals. However, this decision seems to be at odds with a strict reading of TUPE which states that liabilities in relation to employees who object to a transfer do not transfer to the new employer (the transferee).

What can employers do to protect themselves in light of this if they are expecting individuals to transfer to them under TUPE?

1. Try to get the old employer/transferor to indemnify them in respect of the risk of automatically unfair dismissal claims.
2. Ensure the price for the contract or deal is adjusted to reflect the risk involved.

Why might an employee want to simply object to transfer and nothing more?

Objecting to a transfer means:

1. Their employment ends on the date of the transfer, so they do not need to work out their notice period and are free to go to work elsewhere immediately.
2. They may be released from restrictive covenants in their contract. There has been a High Court case where the new employer could not enforce restrictive covenants against an employee whose employment did not transfer over to it.