It is quite common for employers inheriting staff under the TUPE regulations to wish to harmonise the terms and conditions of employment of the transferring staff with the terms of their existing workforce. In the case of London Metropolitan University –v- Sakur, the EAT have decided that employers who wish to change terms and conditions to “harmonise” in this way cannot rely on the “ETO” defence under TUPE, because harmonisation does not in itself involve a change to the numbers or functions of the workforce.
The case concerned a transfer of staff from London Guildhall University to the University of North London. North London sought to change the Guildhall staff’s contracts after the transfer, so as to place them onto North London terms, and nearly two years after the transfer told the staff they would be dismissed if they did not accept the new terms. Those who subsequently refused and were dismissed brought claims. North London tried to rely on arguments that the dismissals were not related to the transfer, and that even if they were, they could rely on the “Economic, Technical or Organisational” reason (ETO) defence under TUPE.
The EAT has now confirmed that the dismissals were connected to the transfer, because North London had always intended to put the staff onto new terms. Also, they could not rely on the ETO defence, because the changes concerned must themselves form part of the ETO reason, and must themselves involve a change in the numbers or functions of the workforce. Changes for harmonisation of terms do not do this, even if they ultimately lead to a dismissal.
Employers should note that harmonisation is still therefore a difficult process under TUPE. Even though the Sakur case was decided under the 1981 TUPE Regulations, and the 2006 TUPE Regulations now expressly state that employers can rely upon an ETO reason as a defence where terms and conditions are changed, harmonisation of this type, in itself, will not allow employers to benefit from the ETO defence.