TUPE: Who does the thinking?

Thanks to Anthony Johnson of 1 Temple Gardens for preparing this case summary.

In Dynamex Friction v. Amicus, the Court of Appeal held that in TUPE cases, when determining whether the reason for a dismissal was transfer-related or an economic reason, it has be the person who took the decision whose thought process is subject to analysis.

In this case, as the company were in administration, it was the administrator’s decision that came under the microscope. The Tribunal had found as a fact that he had to dismiss the employees because he had no money with which to pay them; it had to be said that was an economic reason. Although a purchaser of the business was subsequently identified a week later, there was no evidence to suggest that the administrator dismissed the staff in order to have a better prospect of selling the business. Accordingly, the employees were not dismissed 'immediately before' the TUPE transfer for the purpose of the 1981 Regulations.

So far so good: however, matters were complicated by an allegation that the administrator's mind had been affected by the "Machiavellian machinations" of the American managing director who had the day-to-day running of the business. It was alleged that the administration had essentially been stage-managed, using the administrator as an "unwitting tool" for the business to be regained via an alternative investment vehicle without having to incur various liabilities.

The Court of Appeal held that, even taking these allegations as proven and at their highest, they would not impact upon its decision. The Shrewsbury ET had found as fact that there was no collusion between the administrator and the director. Ward LJ said that the crucial question was "whose decision was it?" Once it was established that it was the administrator's independent decision, nothing done by the director or anyone else could be said to have any bearing on why he did what he did.