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’).
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.