Key facts
The claimants transferred to the employer under TUPE on 24 April 2009. In January 2009 the employer had reviewed the terms of its employees and proposed the introduction of performance-related pay and alternative hours. Following consultation, the changes were agreed and productivity improved as a result. After the claimants transferred, the employer determined that it would not be able to meet productivity requirements without also introducing performance-related pay for the transferred employees. Around 20 transferred employees refused to accept the changes to their terms and conditions and were therefore dismissed. They brought employment tribunal claims alleging that they had been automatically unfairly dismissed for a reason connected with the transfer. The employer argued that there were sound business reasons for the dismissals and that they were not connected with the transfer.
The decision
The employment tribunal unanimously held that the transfer was not the sole or principal reason for the transfer. It was divided, however, over whether the dismissals were connected with the transfer with the two wing members of the tribunal holding the majority view that they were connected whilst the minority view of the employment judge was that they were not. The employer appealed. The appeal was allowed and the case was remitted to a fresh tribunal to consider. The EAT found that it was open to an employer to effect productivity changes and that this does not become unlawful where there has been a relevant transfer if the reason for the changes is connected to the drive for productivity.
What this means for employers
It remains the case that employers making changes to the terms and conditions of recently transferred employees risk claims that the changes are because of the transfer or for a reason connected with it. In this case it was found that the changes were intended to improve productivity and efficiency rather than simply effect harmonisation with the terms and conditions of the existing workforce. Whilst it is possible for employers to satisfy a tribunal that changes were not connected with the transfer, post-transfer variations to terms of employment should be approached with caution.
Enterprise Managed Services Ltd v Dance & others UKEAT/0200/11
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.