In what circumstances is a dismissal to effect contractual changes automatically unfair under TUPE, and what is the appropriate remedy?
These questions were addressed by the EAT in Manchester College v Hazel.
Manchester College successfully bid for Offender Learning contracts from the Learning and Skills Council. The Claimants transferred to Manchester College under TUPE.
There were hidden costs which were not appreciated in the due diligence exercise prior to the transfer. The college began a process of costs savings, which included a request for 300 voluntary redundancies. Following this, the college decided to effect further savings by harmonising terms and conditions across 37 different contracts of employment. The Claimants were asked to agree to wage reductions. They objected and were dismissed with an offer of employment on the new terms. They accepted the new contracts, continued in employment and sued for unfair dismissal.
The majority of the employment tribunal held that the reason for the dismissals was connected with the transfer and not for an economic, technical or organisational reason entailing changes in the workforce. The redundancy process had ended and what was on the employer's agenda now was simple harmonisation of terms and conditions. It was not enough that the college was making some other employees redundant alongside the harmonisation process. It is the reason for dismissal of a particular employee that must entail a change in the workforce of either number or functions. The fact that others are dismissed for the reason of redundancy (a change in the number of the workforce) does not alter the fact that the particular employee may have been dismissed for the reason of harmonisation (not a change in the workforce). The dismissals were automatically unfair. The EAT held this was a correct construction of TUPE.
The employment tribunal considered that the appropriate remedy was re-engagement on their new contracts, but on their old rates of pay. This was practicable since the employees had continued working and had the trust and confidence of the employer. The EAT agreed. In its opinion, this remedy was the only way of recognising the breach of TUPE that had occurred.