Jeffrey Jupp's TUPE resource

September 6, 2017
by admin

Xerox Business Services Philippines Inc Ltd v Zeb EAT – 01 September 2017

This is a rare case of an offshore transfer.  At issue was whether the employee was entitled to transfer to Manila in the Philippines on his  existing UK terms and conditions (‘Ts and Cs’).

The Facts

C was employed by the transferor (X UK) in its accountancy department.   His place of work as stated in his contract was ‘Leeds or Wakefield’ and such other place as the employer might require him to work within reasonable commuting distance of his home.  The accountancy department of X UK was offshored to the transferee, X Philippines, with effect from 1 October 2014.  It was accepted that this was transfer to which TUPE applied.    Employees were given a choice.  They could object to the transfer and if they did they would receive a generous redundancy payment.  If they did not object they would not transfer but would still be made redundant but only with the statutory minimum redundancy pay.  X Philippines would have no requirement to carry out the transferring work in the UK after the transfer. Employees asked if they could transfer to the Philippines.  They were told they could, but only on local (i.e. Philippines) Ts and Cs.

C said he wanted to transfer to the Philippines on his existing Ts and Cs.  This was refused and X Philippines explained that if he was to transfer from his existing Ts and Cs this would defeat the purpose of the offshoring which was to reduce costs.  (The UK salary was 10 times that payable in the Philippines).  C was ultimately dismissed. and paid statutory redundancy pay.

The ET Judgment

C brought a claim for unfair dismissal.  There were various procedural challenges but also C argued that he was not redundant.  The ET agreed and held that redundancy was not the genuine reason for the dismissal.   The work still needed to be done, albeit in Manila, and the real reason why C was dismissed because he wanted to remain on his existing terms. Secondly, the ET held there was an agreed variation to C’s place of work.  It had been agreed that he could transfer to Manila.  This was a variation which was permissible by Reg 4(5).


The EAT (HHJ Richardson) allowed the appeal and held:

(1)  There was no mutual variation.  Following the transfer, X Philippines was required to employ C in Leeds or Wakefield.  It was not required to employ him in Manila.    C was only prepared to work in Manila if his existing Ts and Cs were honoured and therefore there was no agreement as to the terms on which C would be employed.   Ordinary contractual principles apply to a reg Reg 4(5) variation (see Reg 4(5C)).  It was not possible to separate the location of work provision from the other Ts and Cs because the offer put forward by the transferee was that an employee could transfer only if he accepted local Ts and Cs.

(2)  There was a genuine redundancy situation.  The ET erred by focusing on the position in Manila and did not apply the statutory test under section 139 of the Employment Rights Act 1996.  The first question was whether, as a matter of fact, the requirements of the transferee’s business for employees to carry out work of a particular kind in the place where the employee was employed by the employer, had ceased.  The ET did not specifically address this question but the findings of fact were only consistent with an answer that those requirements had ceased.

(3)  Neither party in the ET had addressed Reg 7 of TUPE (i.e.whether the sole or principal reason for the dismissal was the transfer).  The transferee had not raised it because it was not raised by C.  Nevertheless the EAT held that it ought to be addressed by the tribunal in any TUPE unfair dismissal case because it is a core part of unfair dismissal law in such a case.   Generally a genuine cessation or diminution of business or another form of genuine business reorganisation if it entails changes to the workforce before or after transfer will fall within Reg 7(2). If the sole or principal reason does fall within Reg 7(2), then the reason for dismissal will either be redundancy or some other substantial reason and the ET will go straight on to apply the test in section 98(4) of the ERA.  The case was remitted to determine this issue.

Link to judgment

June 28, 2017
by admin

Federatie Nederlandse Vakvereniging v Smallsteps BV ECJ – 22 June 2017

The ECJ considered the application of the Directive to pre-pack administrations.    Four employees and their trade union brought proceedings after the employees were dismissed following a pre-pack.

Article 5(1) of the Directive provides that the automatic transfer provisions under Art. 3 and Art. 4 of the Directive; shall not apply to any transfer… where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of a competent public authority (which may be an insolvency practioner authorised by a competent public authority).

This is replicated in Reg. 8(7) of TUPE.


The Facts

The Estro Group operated 380 nurseries and employed 3,600 workers.  It became insolvent and an arrangement was made whereby it would transfer a substantial proportion of its business to a newly created company, Smallsteps.  An administrator was appointed on the 10 June 2014.  A declaration of insolvency was made by the Court under Dutch law on the 5 July 2014 and on the same day the business, consisting of 250 of the 380 nurseries, was transferred to Smallsteps.    The claimants worked in nurseries taken over by Smallsteps and were not offered contracts.   They sought a declaration that their employment had transferred.

The Dutch court referred a number of questions to the ECJ but the principal issue was whether Art. 5(1) applied to pre-pack whereby the arrangement for the transfer of the business was made before the declaration of insolvency and carried out immediately after that.  I.e. where there never any intention to enter liquidation.


The ECJ stressed that Art. 5(1) only applies to insolvency proceedings where they have been instituted with a view to the liquidation of assets of the transferor and they under the supervision of an insolvency practitioner.    This has to be construed strictly as it deprives workers of the rights on transfer.  This exclusion does not extend to the process of preparing for insolvency.  Whilst in this case there was an insolvency procedure and the transfer did not take place until after the declaration of insolvency, the procedure was aimed at the continuation of the undertaking and not its liquidation.  Therefore, Art. 5(1) did not apply.

A pre-pack procedure may be aimed both at maximising the return for creditors and ensuring the continuation of the undertaking, its operational character or the viability of its business.  The ECJ held that although there may be some overlap of those two objectives within the aims of any given procedure, the primary objective of the procedure in this case was to ensure the continuation of the undertaking and therefore Art. 5(1) did not apply as the procedure was not instituted with a view to the liquidation of assets.


English case law has taken an absolutist approach looking at the character of the insolvency proceedings rather than the underlying intention (see Key2Law).   It is possible, that this case may lead to a challenge to that approach, although that us unlikely because Key2Law held that Reg 8(7) will never apply to administration proceedings.

Link to Judgment

June 13, 2017
by admin

ICAP Management Services Limited v Berry QBD – 6 June 2017


My last post concerned this case when an interim injunction was refused.   I noted the case raised interesting arguments in relation to the interaction between TUPE and restrictive covenants and, in particular, the right to object under Reg 4(8).

At the the trial of the action the employee’s claim failed because he could not establish that there was a transfer. The key issue that eventually crystallised was whether the employee’s employer had in fact in changed.  This arose in the context of a share sale.

The High Court Judgment

In a helpful analysis the High Court (Garnham J) considered the legal issues under 4 headings:

i. By whom was the employee employed

The Court noted that in Albron Catering BV v FNV Bondgenoten that it was not necessary for the employee to be employed by the transferor.  He could be a seconded employee who had in effect a ‘non contractual employer’.  This would be the case if the employee was seconded on a permanent basis although they remained contractually employed by the seconding employer.    Here the judge held the employee was never seconded in this manner.

ii. Need for a change in employer

As may thought to be self-evident, it is essential in order to establish a transfer that the employer must change.  The Court noted this was clearly set out in the Directive and the Regulation as well as in both ECJ case law (Berg v Besselen (C-144/87) and CLECE SA v Martin Valor (C-462/09))  and domestic case law (Brookes v Borough Care Services [1988]).

iii.  The significance of a share of shareholding

The Court noted that a change in the legal control of the employer does not itself transfer the business (Millman v Print (Factory (London) 1991 Ltd).  However in some cases a change in share ownership may in reality mean there is a transfer of an undertaking.

iv.  The indicia of transfer 

The Court considered MillmanJackson Lloyd Ltd v Mears Group plc and the ECJ case law referred to above and held that the fact that the transferred business has been integrated is a relevant factor but it is not the test.  “[T]he critical elements of the test are whether the new party (i) has become responsible for carrying on the business, (ii) has incurred the obligations of employer and (iii) has taken over day to day running of the business. It seems to me that those elements of the test can be captured in more colloquial terms – “Has the new party stepped into the shoes of the employer?””.

The Court applied this test and held that there had been no change in the manner in which the business was operated before and after the share sale.

Link to judgment

April 7, 2017
by admin

ICAP Management Services Limited v Berry QBD – 3 March 2017

This case concerns an application for an interim injunction to enforce post termination restrictions (PTRs).  To avoid those PTRs the employee sought to invoke TUPE in a creative and interesting way.

The Facts

B worked for ICAP in a senior role.  He resigned giving the required 12 months’ notice on 22 July 2016.  He was off to joint a competitor, BGC.   ICAP reminded him of his PTRs and placed him on gardening leave.   His employment was therefore due to terminate on 21 July 2017.   So far as material, his PTRs provided, in summary;

(i)  For 6 months following the date of termination [i.e. 21 July 2017] he would not work for a competitor.

(ii)  For 9 months following the date of termination [i.e. 21 July 2017]  he would not solicit business from any of ICAP’s clients with the purpose of providing them with the services that ICAP had provided, if he had been involved in providing such services in the 12 months before termination.

These periods would be reduced by any time spent on gardening leave.    The effect would therefore be that they would have expired at the end of his gardening leave when he would be free to join BGC and solicit clients.   ICAP presumably content that he had been kept away from their clients and competitors for 12 months.

B was no doubt happily digging his garden when he learned that ICAP had been acquired by TB with effect from the 30 December 2016.  On 7 February 2017 his solicitors wrote to ICAP drawing attention to this and asserting it was a TUPE transfer and that B objected to the transfer.  Reg 4(8) of course provides that  where an employee so objects, the relevant transfer shall operate so as to terminate his contract of employment with the transferor.   Therefore, if B was right and there was transfer, because of his objection to the transfer, the contract terminated on the transfer.

Of course his PTRs were still binding but because he had been on garden leave for over 6 months and because this time was set off against the period within the PTRs he was free to join BGC and free to solicit their clients from the 25 April 2017.

B joined BGC and ICAP applied for an injunction.

The judgment

Frustratingly for TUPE watchers there was insufficient evidence before the Court for the judge (O’Farrell J’) to  determine whether or not there was a transfer, although all parties agreed that is was a serious issue to be tried (it appears to have been accepted that if there was a transfer then B’s argument was correct).  The case was therefore decided on conventional injunction principles and and ICAP obtained an interim injunction,  with a speedy trial listed for the end of April.  (It is not known whether the case has been resolved).

Link to judgment





March 29, 2017
by admin

Born London Limited v Spire Production Services Limited EAT – 28 March 2017

If a transferor provides inaccurate Employee Liability Information (ELI) to a transferee does the transferee have a right to compensation under Reg 12?  Answer; not necessarily.

The Facts

Born took over a print finished contract from Spire.   It was a Reg 3(1)(b) service provision change.  The client was Sotheby’s. The print finishing contract contract had a term of 5 years.    Born were told by Spire, as part of the Reg 11 ELI provided by Spire before the transfer, that the 30 + employees who were to transfer had a ‘non-contractual’ Christmas bonus of one week’s pay plus £7.50 per year of service payable each November.  After the transfer the employees asserted that this entitlement was contractual and for the purposes of a strike out application this was assumed to correct. (Indeed in a separate and subsequent case between Born and some employees a different Employment Tribunal held this to be the case.)

The ET Judgment

Born brought a Reg 12 claim against Spire. Born’s case being, essentially, that because the bonus was non contractual it would have had a discretion not to pay it and would not have done so.  It had therefore suffered loss which exceeded £100,000 over the life of the contract.

Its case was that Spire failed to comply with Reg 11(2)(b) which required Spire to provide:  Those particulars of employment that an employer is obliged to give an employee pursuant to section 1 of the [ERA] (i.e. the Statement of Initial Particulars)Section 1(4) of the ERA provides that the statement that the employer was obliged to provide the employee with was to contain particulars of:  (a) the scale or rate of remuneration or the method of calculating remuneration,  (b) the intervals at which remuneration is paid (that is, weekly, monthly or other specified intervals). 

Spire applied to strike out Born’s case as having no reasonable prospect of success.  Spire’s case was, quite simply, that it had provided the section 1(4) details in relation to the Christmas bonus, (as it had) and that section 1(4) did not require it to state whether the bonus was contractual.   As it had no obligation to state whether the bonus was contractual it was not in breach of Reg 11 when it stated a bonus was non contractual in circumstances when it was in law contractual.

The Employment Judge acceded to Spire’s application.  Born appealed.

The EAT judgment

Born’s case was that it was implicit in section 1(4) that the employer was required to state whether remuneration was contractual and, if it was not, then it was required by Council Directive 91/533/EU (on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship; (the 1991 Directive) and Acquired Rights Directive (the ARD).  Consequently, Spire was required to accurately inform Born on the transfer that the bonus was contractual.

The EAT (HHJ Eady QC) dismissed the appeal for the following reasons:

(i)  It was important to note that although section 1 of the ERA was incorporated into Reg 11 it had a much broader application.

(ii) Although section 1 is a right which pertains to employees the particulars provided are not a contract although the statement is persuasive (but not conclusive) evidence of a contract.

(iii)  Although pay is likely to be an important part of the contract not all forms of remuneration are contractual the learned judge was not persuaded that non-contractual matters should be left out of the section 1 statement.

(iv)  The reference in Article 2(1) of the 1991 Directive to the ‘contract or employment relationship’ envisages that there may be particulars provided which are not contractual.  Further, the requirement in Art 2(2) that the employer notify the employee of the ‘essential aspects of the employment relationship‘ does not impose a requirement to identify the contractual nature of the entitlement.

(v)  The requirement in Art 3(1) of the ARD for the transferor to notify the transferee of all the rights and obligations that will be transferred is not confined to contractual rights.

Link to Judgment


The remedy of a transferee is likely to lie either in any contractual indemnities (there were none in this case) or in an action for negligent misrepresentation.

March 8, 2017
by admin

Tees Esk & Wear Valleys NHS Foundation Trust v Harland EAT – 3 March 2017

In Service Provision Change cases, after determining that there is an organised grouping it is necessary to consider under Reg 3(3)(a)(i) whether that grouping had as its ‘principal purpose the carrying out of the activities concerned on behalf of the client’.  This case considers the correct approach to this issue.


The facts

The case concerned care for a seriously disabled person, CE, provided by the NHS Trust for a period of 10 years.     Over time, and very gradually, CE’s condition improved.  Before 2011 he had required seven to one care.  From 2011 he required four to one care.    As a result CE moved to a new facility in 2012 in which there were number of other service users  requiring specialist care but housed in separate flats.   At that time four to one 24 hour care translated into 10 full time equivalent posts (or 11 employees).   CE’s condition continued to improve further, such that by  February 2014 he required only one to one care during the day and two to one care for six hours on a Friday.  He rarely required care at night.   As a result of the improvement in CE’s condition the carers engaged to look after him were required to work flexibly and to look after other service users in the same building.     In 2015 there was transfer to DH Ltd who had successfully won the contract for the care of CE.    The NHS Trust, prior to the transfer, told DH Ltd there was an organised grouping of 11 employees who’s principal purpose was caring for CE.     During consultation it reduced this to 7 employees who had been engaged in 2014 as spending more than 75 per cent of their time in caring for CE.

The ET judgment

The ET held there was a consciously organised grouping.  A team had been deliberately put together to look after CE.  Further that all 11 employees had been assigned to the organised grouping.  On the issue of principal purpose however the ET held that the organised grouping was too large and as a consequence the the principal purpose was no longer the care of CE, rather it had become diluted.   The purpose had fallen away and was no longer the dominant purpose of the group but by the date of transfer had become a subsidiary purpose.     Had the group gradually reduced as CE’s condition improved then the outcome may have been different but it did not and the principal purpose no longer existed immediately before the transfer.  Consequently there was no transfer of any employee.

The EAT judgment

The EAT (HHJ Eady QC) held that the ET was correct to focus on the position in 2015.  Reg 3(3)(a)(i) requires an assessment of the position immediately before the transfer.  The ET made a clear finding that the principal purpose had changed over time so  by the date of the transfer that it was not predominantly the care of CE.

The central issue was whether the ET were entitled to look at the facts on the ground rather than the original intention.   HHJ Eady QC held that there was no ‘bright line’ which meant excluding either of these factors.  Rather the words of the regulation should be applied. Adopting that approach, it is apparent that it is not simply the carrying out of the activities that means that the existence of the organised grouping meets the relevant condition; the carrying out of those activities has to be the principal purpose of that grouping, whether or not it is in fact carrying them out at any particular time. If the grouping in fact carries out other work, that might well point to its organisation being for a purpose other than the activities relevant to the service provision change. Similarly, if the grouping comprises far too many employees than would be necessary for the activities in question, that might suggest either that not all the staff concerned were in fact assigned to it or that the real purpose behind the organisation of the group was other than the carrying out of the relevant activities for the client. These are possibilities that an ET might properly consider relevant to its assessment, but it would not be sufficient to identify the actual activities being carried out by the organised grouping without determining its principal purpose.

Reg 3(3)(a)(i) does not ask what was the transferor’s intention (although this will be relevant to determining whether or not there is an organised grouping and may suggest its purpose) but what was the principal purpose of the organised grouping of employees. Addressing this question the ET found that, at the relevant time, this was the carrying out of activities other than those which were to be the subject of the service provision change.

Link to judgment


The failure to reduce the size of the team caring for CE had the effect that there was no transfer of any member of the team.  Had the NHS Trust reduced the team over time as CE’s care needs reduced, then those engaged in his care at the time of transfer would have transferred.

There are two ways to avoid what occurred here.  The first (which is likely to more successful than the second) is to reduce the size of the team over time so that it matches the requirements of the service as those requirements change.  The second is, when the service is coming up for retender, to consciously reorganise the team so as to reduce it in size.

February 13, 2017
by admin

Asklepios Kliniken Langen-Seligenstadt GmbH Felja ECJ AG – 19 January 2017

The Advocate General has provided an opinion in two joined cases referred from the German Labour Court on the issue of whether a transferee can be compelled to apply the provisions of a collective agreement adopted after the transfer.   Essentially a revisiting of the static/dynamic issues in Alemo-Herron.

Arts 3(1) and 3(3) provides:

1. The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee.

Member States may provide that, after the date of transfer, the transferor and the transferee shall be jointly and severally liable in respect of obligations which arose before the date of transfer from a contract of employment or an employment relationship existing on the date of the transfer.

3. Following the transfer, the transferee shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement, until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement.

The Facts

The employees were employed by a public authority until 1997 when they transferred to a private company, KLS.  KLS ageed that the employees employment would continue to be governed by a collective agreement  (known as the BMT-G II) to which it was not a party and by any subsequent collective agreements that supplemented, amended or replaced it.

In 2008 the business of KLS was transferred to another company in the same group, Asklepios.  Asklepios is also not party to the BMT G II agreement or to the collective agreement that replaced it (the TVöD) or another collective agreement that supplemented the TVöD (the TVÜ-VKA).

The employees sought a declaration that Asklepios was was bound by the terms of the two collective agreements (TVöD and TVÜ-VKA).      Asklepios on the other hand argued that having regard to the Directive and to Article 16 of the Charter of Fundamental Rights of the European Union.  

The AG’s Opinion

The AG first revisited Werhof and Alemo-Herron.  The AG observed that although the end result was the same in both cases (rights under collective agreements remained static) the reasoning was different in each case.  In Werhof the ECJ applied Art 3(1) and held that the provisons of the collective agreement transferred and are to be observed after the transfer.  However, this is only the position until there is a new collective agreement.   The transferee is not bound by a new agreement to which he was not a party.   In Alemo-Herron this reasoning was built on by the application of  Article 16 of the Charter, which provided for the freedom to conduct a business, one component of which is the freedom of contract.

The AG then held:

The starting point is that as at the date of transfer the employee should work for the transferee on the same terms and conditions as with the transferor.   There can be no derogation from this principle and in effect the transferee is subrogated to the transferor’s rights and obligations.

The AG then addressed the argument that where a contractual clause contains a dynamic provision to the effect that the parties agree to be bound by future collective agreements then it must follow that the employee is entitled after the transfer to the rights contained in any future collective agreement.  In his opinion this did not follow because Art 3(3) has a limiting effect.  Arts 3(1) and (3) represent the interaction of two rules. First, the general rule that the rights and obligations arising from a contract of employment in existence on the date of transfer within the meaning of that directive must be transferred to the transferee.    Second, the degree to which the transferee remains bound by terms and conditions agreed under a collective agreement applicable to the transferor on the date of the transfer.

So far as terms and conditions provided for in a collective agreement are concerned, Art 3(3) operates to limit the scope of the obligations on the transferee . It follows from that provision that it is only the terms and conditions provided for in the collective agreement in force on the date of transfer that must continue to be observed by the transferee.

Art 3(3) provides a compromise intended to reconcile the interests of the transferee and those of the employees affected by the transfer of the undertaking.   It strikes a balance between competing interests: on the one hand, the employee has a right to benefit from the specific terms and conditions previously agreed with the transferor, while, on the other hand, the transferee has a legitimate right to know the extent of its future obligations and, therefore, not to be bound by new terms and conditions defined at the end of a collective bargaining process in which it will not or cannot participate.

The AG opined that:

the dynamic reference clause ceases to have effect in the situations provided for in Article 3(3) that is to say where [the collective agreement] expires, terminates or is replaced and, if the Member State has so provided, where at least one year has passed since the undertaking was transferred. Those clauses do not therefore apply to collective agreements concluded after the date of transfer, unless the new employer expresses a different wish.

The AG did not feel it necessary to consider Art 16 of the Charter because the issue could readily be resolved by a proper application of Arts 3(1) and 3(3).

Link to Judgment


February 13, 2017
by admin

Unionen v Almega Tjänsteförbunden ISS Facility Services AB ECJ AG – 01 February 2017

In this case the Advocate General of the ECJ has handed down an opinion on the issue of whether a transferee is required to take into account service with the transferor when calculating notice periods.  This was a referral from the Swedish Labour Court.

The Facts

Four employees with long service transferred from two transferors to ISS.    After some years of service with ISS they were all made redundant.   At the date of redundancy all had total service with the transferor and ISS in excess of 10 years.   (In two cases over 40 years.)  However they had all only been employed for periods between 2 and 6 years with ISS (the transferee)  since they transferred.

Both the transferor and transferee were parties to collective agreements which gave different periods of notice depending on the length of service of the particular employee.  Of significance, the transferor and transferee had separate collective agreement with the same trade union but each collective agreement had the same provision relating to length of service and notice.  This provided for extended notice in cases where length of service exceeded 10 years and the employee was aged over 55 years as was the case here if length of service with the transferor was taken into account..

In accordance with the discretion afforded by Art 3(3) of the Acquired Rights Directive, Swedish law only required compliance with collective agreements entered into by the transferee for one-year after the transfer.  The employees had all been employed for well in excess of one year after the transfer.

The Issue

The central question was whether when applying the notice provisions in the transferee’s collective agreement, service with the transferor, before the date of transfer, counted.

The AG’s opinion

The AG was of the opinion that service with the transferor should be counted in the application of the calculation in the notice provisions.  In reaching this opinion the AG made the following observations:

  • Although length of service does not as such constitute a right that transfers it is used to determine other financial rights which do transfer such as termination payments.  Here the length of service had a direct impact on the notice payment payable to the employee.
  • Here the reason for the change in entitlement was necessarily the transfer (and therefore void) where there had been no independent negotiation of the notice provisions after the transfer.   Moreover, had the employees not transferred they would have been entitled to have the notice periods calculated on the basis of their full service.
  • The purpose of the Directive is to prevent employees being placed in a less favourable position solely because of the transfer  and to ensure their rights are safeguarded.
  • As for Art 3(3), this cannot  have the aim or effect of imposing on the employees conditions which are, overall, less favourable than those applicable before the transfer. (see Scattolon, C‑108/10, paragraph 76).   The same must necessarily be the case with respect to the one year option when the relevant terms of the pertinent collective agreements are identically worded.

Link to AG’s Opinion



November 23, 2016
by admin

Osborne v Capita Business Services Ltd EAT – 10 November 2016

This case concerns the ETO defence in Reg 7 (before the 2014 amendment of Reg 7 and the introduction of Reg 7(3A)).   The EAT provides a useful reminder of the approach to ETO issues.


The Facts

The Council, by way of a service provision change, outsourced; pensions, customer services, HR and, benefits support and control services to C from 1 September 2013.    Some thirty staff were made dismissed.  It was claimed that the dismissals were unfair because they were for a reason related to the transfer.  C defended the case on the basis that the dismissals were for an ETO reason, namely; savings arising from economies of scale, sharing services and accommodation with others, automating processes and introducing customer self-service.   Nine lead claims were selected to be reflective of the varying circumstances giving rise to the dismissals.


The ET judgment

In respect of seven claimants the ET held that they were dismissed because their roles had moved to different locations and the functions of their roles had been split.  In respect of the other two claimants (O and L) the position was as follows.  As regards O, the reason for his dismissal was because his role had moved from Barnet to Coventry.  As regards L, her role had moved to Darlington and, whilst there were some differences between her role and the new role, these were not significant.  She was dismissed because she refused to move to Darlington.

The ET held that the principal reason for the dismissal of the claimants was a reason related to the transfer.  The ET then considered each of the nine claimants separately and whether the ETO defence was made out in their cases.  In respect of O the ET held that the principal reason for the dismissal was relocation of the role and that this was not (as the Regulations then provided) a valid ETO reason.  In respect of the group of seven claimants referred to above, the ET held that the reason was because the jobs were split between various functions and because of the relocation of those functions to various towns and cities.  This was an ETO reason entailing changes in the workforce.  In respect of L it was held that because the intention was to reduce numbers she was affected by this and even though her role had not changed much this was nevertheless a valid ETO reason.


The EAT judgment

The eight unsuccessful claimants appealed.  In respect of the group of seven the primary ground of appeal was that the ET had failed to have regard to an undertaking given by C at the time of the transfer that any employee who wished to move to the new location would be entitled to do so and would not have to undergo any competitive process.   The argument on behalf of the claimants was that this clearly demonstrated that the reason for the dismissal was the change in job location.  However, C had not said that the claimants would retain their existing roles but simply that they would be given a role.

The EAT, Langstaff J, dealt shortly with this ground of appeal – the ET did not have to deal with every point raised before it.  What was important was that a party knew why they had won or lost and here the reason was clear.  The group of seven claimants were dismissed because their roles had been divided up and redistributed and because the locations had changed.  The change in functions was sufficient to establish the ETO defence.  The undertaking that was given may be relevant to the fairness of the dismissals but was not relevant to the ETO defence.    The EAT accepted the position of L was different and because there was no change to her role the ET ought not to have held the ETO defence was established in her case.


The usefulness of this EAT decision lies in Langstaff’s J reminder of the principles of the ETO defence: A structured approach to ETO reasons as set out in Manchester College v Hazel should be applied.

  • Establish the reason for the dismissal;
  • Determine whether the dismissal is because of the transfer itself or reason connected to it. If the former, the dismissal is automatically unfair.  If the latter, is there an ETO reason?
  • As regards ETO:
    1. is the reason an economic, technical or organisational reason;
    2. does it entail changes in the workforce?

(As will be appreciated (a) and (b) are apposite for dismissals before 31 January 2014.  For dismissals after that date Reg 7 no longer refers to ‘a reason connected to the transfer’ (see comment below)).

Further, the following principles also apply:

  • In any dismissal (and TUPE dismissals are no different) the focus is on the contract the employee is working under. Therefore, even if the employee continues working for the employer, if he does so under a different contract imposed on him, there will have been a dismissal.
  • The identification of an economic, technical or organisation reason usually causes little difficulty, however the qualifying phrase, ‘entailing changes in the workforce’ often does.
  • Each claimant must be considered separately, Miles v Insitu Cleaning Co Ltd.
  • Any change in role must be significant, Green v Elan Care Ltd.
  • A mere change in location will not amount to change in the workforce, RR Donnelly Global Document Solutions Group ltd v Besagni.



Although not addressed by the EAT, the removal of the reference to a ‘reason connected to the transfer’ in the amended Reg 7 leaves potentially three possibilities when identifying the principal reason for the dismissal:

  • The transfer itself – automatically unfair.
  • An ETO reason (which now includes a change in place of employment) – potentially fair.
  • A reason connected to the transfer which is not the transfer itself and is not an ETO reason – either fair or unfair depending on the reason.

Link to EAT judgment

October 10, 2016
by admin

The Salvation Army Trustee Co v Bahi EAT – 1 September 2016

This case concerns whether activities in a Reg 3(1)(b) were fundamentally the same before and after the transfer as required by Reg 3(2A).

The Facts

The Claimants were employed by a charity, CCL. They formed a team working in adult services for Coventry Council in connection with two contracts between CCL and the Council for the provision of accommodation support for homeless people.  CCL’s work involved:  Making an assessment of potential service users; allocating a support worker to those accepted to the service; developing a tailored support plan to the service user and supporting them in accordance with the plan; providing a floating support service once the service user moved on from CCL’s accommodation to other accommodation.

The Council provided its services to the homeless under 22 separate contracts with different providers.  It wished to merge these services and those for ex offenders into one single point of contact.  SAT were awarded this contract.  Initially CCL were intended to be a sub contractor but this did not happen.  SAT utilised its own hostel and acquired another hostel in order to service the contract.

SAT operated the service in a different manner to CCL.  It had an assessment centre where service users were assessed and those with low or medium needs were found private rented accommodation.  Those with high need were admitted to an assessment unit with a support care plan.  The user would then go into accommodation which, if it was to be supported, would be in one of SAT’s hostels.  The service was provided to those over the age of 25 rather than 18 as previously, and the time spent in supported accommodation was markedly shorter than before.  The support workers hours of work were also different.

The ET Judgment

The key issue in the case was whether the activities remained fundamentally the same before and after the transfer.  Whilst there were the differences summarised above, the EJ held that the fundamental activity was the provision of accommodation and the input of a support worker to facilitate the individual returning to mainstream private accommodation.  He did  not consider that the 24 hour concierge attendance compared with the on call 24 hour support was a fundamental difference between the two activities.  Nor was the fact that dispersed accommodation was offered before and hostel accommodation was offered afterwards, constituted a fundamental difference in activity.  The outcomes by which the Council measured the provision of the service were identical both before and after the change.

The EAT Judgment

 SAT appealed and, in essence, argued that the activities before and after the transfer were not fundamentally the same.  The EJ approached the matter too generally and in a simplistic way and that the activities should have been more clearly defined.

The EAT (HHJ Richardson) held at [22] to [23]

  1. The EJ was correct. A pedantic and excessively detailed definition of “activities” would risk defeating the purpose of the SPC provisions. Arch Initiatives v Greater Manchester West Mental Health NHS Trust applied.
  2. In this case the EJ had steered a correct course between the twin dangers of over generalisation and pedantry.
  3. An argument that the EJ had erred by referring to fundamental differences rather than the activities being fundamentally the same was rejected.   He had used the language of “fundamental difference” in antithesis, in direct opposition, to the phrase “fundamentally the same” and in doing so was rejecting the contentions of SAT that the features in question were such that the activities were not fundamentally the same.

Concluding remarks of the EAT

 At [27] HHJ Richardson expressed concern about the cost and expense of resolving an issue such as this and suggested that some form of speedy dispute resolution procedure was highly desirable.


Winning the argument as to the definition the activity is often critical in an SPC case.  For the transferor this often means seeking a broad interpretation and for the transferee a more narrow and focused definition.   A considerations of how to define this issue is something that needs to be addressed when giving advice at the outset and not left until the Tribunal hearing.

I will be writing a separate post on the suggestion of an early dispute resolution procedure.

Link to judgment