Smith v Trustees of Brooklands College UKEAT/0128/11/ZT and Enterprise Managed Services v Dance & Ors UKEAT/0200/11

  1. Smith v Trustees of Brooklands College UKEAT/0128/11/ZT

This case involved post-transfer variations to the terms and conditions of employees who had transferred to Brooklands under TUPE. The employees agreed to the variations at the time they were implemented, but later argued that they were void and unenforceable because the reason for the variations was connected to the transfer itself. The employee’s lost this argument in the Tribunal and their appeal to the Employment Appeal Tribunal (EAT) centred on whether the Tribunal had been correct in deciding that the reason for the variation was unconnected with the transfer.

The EAT upheld the Tribunal’s decision, finding that the Tribunal Judge was justified in deciding that Brooklands’ HR Director (who made the decision to seek the agreed variation) had done so for reasons unconnected with the transfer. In the EAT’s view, the real reason for the variation was the belief that the employees had mistakenly been paid a rate of pay that was out of step with the rest of the sector.

  1. Enterprise Managed Services v Dance & Ors UKEAT/0200/11

In this case there was a competing argument as to whether the reason for the post-transfer changes was to harmonize the transferring employees’ terms with those of the existing workforce (as the claimant employees contended), or to maximise the success of pre-transfer changes made to the existing employees’ contracts in order to improve productivity (as EMS argued). The Tribunal’s decision on this point would determine whether the changes were connected with the transfer and so potentially void.

The Tribunal held that the principal reason for the change in terms was harmonization, with the improved performance of the contract being merely a consequence of the harmonization. Therefore the changes were transfer-related. The EAT criticized the Tribunal’s reasoning in coming to its decision, and allowed EMS to appeal on the basis that on the evidence the intention to improve productivity and efficiency was the principal reason for the post-transfer changes, not the desire to harmonize terms.

Implications

The issue of whether or not a post-transfer variation of terms is connected with a TUPE transfer, and therefore void, is a notoriously problematic area. Although these decisions do not establish any new principle of law, they provide employers with an indication of the circumstances in which the Tribunal may find that the reason for the post-transfer variations was sufficiently unconnected with the transfer.

The Brooklands case centred on a rare factual scenario where it could be said that circumstances existed prior to the transfer (namely the lack of compliance of the employees’ terms with trade union guidance, and the fact that their pay was entirely out of step with rest of the sector) that would arguably have entitled the original employer to vary the employee’s contracts had there been no transfer. The EMS case, however, is a good example of a commercial reason that could be applied to any group of employees, irrespective of whether they transferred under TUPE.