Background/facts

Most of our clients are aware of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), which protect employee rights on the transfer of the business or contract in many circumstances.

The EAT has confirmed that, in order for dismissal to be automatically unfair because it is connected with a transfer of undertaking, it is not necessary for the transferor (this is the business selling or transferring the contract) to have a specific transferee (i.e. the buyer or recipient of the contract) in contemplation.

In this case the Claimant was the Managing Director of a business which was up for sale. No transferee (buyer) had been identified, however a view had been taken that an incumbent Managing Director was too expensive for a purchaser. They decided to dismiss him purportedly on grounds of redundancy.

The Employment Tribunal and the EAT held that the dismissal was automatically unfair. It was not necessary for the transferor to have the specific transferee in contemplation for that to apply. The EAT also considered, given the dismissal was by reason of a transfer, whether there was an economic, technical or organisational (known as an ETO) reason for the dismissal, which could have provided a defence that the dismissal was not automatically unfair. Because the EAT held that the employer was a Managing Director and that there was a continuing need for that role (in the absence of any information to the contrary as there was no buyer) this could not be an ETO reason for the dismissal.

Comment

The above case is a further demonstration of how TUPE case law expands to protect employees rather than employers. It is further warning as to the strict applicability of automatic unfair dismissal in such circumstances, and the limited nature of the potential defence to such claims.