The claimants, along with around 1,500 other employees, transferred to the employer. After the transfer the College employed some 3,500 staff on 37 different sets of terms and conditions of employment providing offender learning services. When it became clear that the services were not economically viable, around 300 redundancies were proposed, alongside a programme of harmonising terms and conditions of remaining staff. The claimants refused to accept the new terms, because they involved a pay cut. They were dismissed and re-hired on the new terms and conditions and brought unfair dismissal claims.
The tribunal and EAT found that the dismissals were automatically unfair and the Court of Appeal has upheld this. They were for a reason connected with the transfer but the College could not show that they were for an economic, technical or organisational reason entailing changes in the workforce. This was because the claimants' dismissals did not involve a change in employee numbers or functions. The fact that redundancies had taken place at about the same time did not alter that analysis. It was clear that by the time of the claimants' dismissals the redundancy exercise had come to an end and a process of harmonising terms and conditions had begun. The tribunal was entitled to order re-engagement, meaning that the claimants continued to be employed on the new terms and conditions but with their (higher) pre-dismissal salaries preserved.
It is interesting to note that the Court of Appeal's conclusion was that "the effect of the European Directive (and thus of TUPE)" is that the right of employees to preserve their existing terms prevails over the employer's interest in achieving harmonisation, at least when it is "connected with" the transfer. The case was heard before the recent changes to TUPE but it neatly highlights the uncertainty of the new formulation of the rules protecting employees against transfer related dismissals.
Under the old rules, dismissal was automatically unfair if the sole or principal reason was the transfer itself or a reason connected with the transfer (that was not an ETO reason). The Government took the view that this went further than was necessary under the European Directive and therefore amended it to provide that dismissals are be treated as automatically unfair if "the sole or principal reason" for the dismissal is the transfer. But the Government made it clear all along that the changes to TUPE were not intended to legitimise harmonisation of terms and conditions, essentially because the Directive did not permit it, so we are left in a situation where it is unclear whether the protection against unfair dismissal has been narrowed and, if it has, whether this is compatible with the Directive.