In Hare Ltd v Kaur the Employment Appeal Tribunal (EAT) upheld a decision that the dismissal of an employee immediately before a Transfer of Undertakings (Protection of Employment) (TUPE) Regulations transfer was automatically unfair because the principal reason was the transfer. The EAT rejected the transferee employer's argument that the reason for the dismissal was personal to the employee's circumstances and therefore unrelated to the transfer.
Ms Kaur was employed by wine and beer wholesale business H&W Wholesale Ltd. When the business got into financial difficulties, Hare Wines Ltd agreed to purchase it.
The employment contracts of all H&W's existing employees, apart from Kaur, were transferred to Hare. Kaur's employment was terminated two days before the transfer. She was told by H&W that this was because the business was ceasing to trade, but Hare argued that it was because she had objected to the transfer.
Kaur initially brought proceedings claiming redundancy pay and notice, but later amended this to include an unfair dismissal claim. She argued that the principal reason for her dismissal was the transfer of the business; therefore, it was automatically unfair under Regulation 7 of TUPE. Hare's defence was that Kaur had objected to the transfer; meaning that any liability for her dismissal remained with H&W.
The main question for the employment tribunal was whether Kaur had objected to the transfer. Kaur claimed that her manager did not want her to transfer because they had a strained relationship and thus Hare did not want her to transfer. The employment tribunal considered Kaur's evidence and concluded the factual dispute in her favour, holding that she would have transferred but for her dismissal. As such, the reason for the dismissal was the transfer.
Hare appealed to the EAT, arguing that the reason for the dismissal was entirely personal to Kaur and did not relate to the transfer. The EAT dismissed the appeal and upheld the employment tribunal's finding that the transfer was the reason for the dismissal, based on the following grounds:
- TUPE is designed to protect employees and new categories of defence should be introduced with caution so as not to undermine that protection. The existence of personal reasons does not mean that the reason for the dismissal is not the transfer.
- The proximity of the dismissal to the transfer is an important consideration when determining the reason for the dismissal (P Bork International v Foreningen Af Arbejdsledere I Danmark (1989) IRLR 41).
- Where an employer has taken action to resolve ongoing difficulties only at the point of the transfer by dismissal, the employment tribunal may conclude that the reason for dismissal was the transfer.
The EAT summarised the decision as follows:
An issue affecting an employee's conduct or competence, if suddenly acted upon at the point of transfer, is unlikely to be the sole or principal reason for the dismissal. An employer taking the opportunity to dismiss in such circumstances could reasonably be said to be motivated by the transfer, thereby making the transfer the principal reason for the dismissal. It will all, of course, depend upon the facts of individual cases.
Dismissals will be treated as automatically unfair if the sole or principal reason for the dismissal is the transfer itself, unless it can be shown that the dismissal is for an economic, technical or organisational reason (ETO) entailing changes in the workforce. The case emphasises that even where an employer believes that it has a non-transfer-related rationale for the dismissal – regardless of whether it qualifies as an ETO reason – caution should be exercised if the dismissal will occur close to the transfer date.
For further information on this topic please contact Soyoung Lee at Lewis Silkin by telephone (+44 20 7074 8000?) or email (email@example.com). The Lewis Silkin website can be accessed at www.lewissilkin.com.
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