In an important decision concerning TUPE transfers, the Employment Appeal Tribunal (EAT) has given guidance in the case of Tapere v South London & Maudsley NHS Trust on, first, the interpretation of mobility clauses in the context of a TUPE transfer and, secondly, on Reg 4(9) TUPE, which allows a transferred employee to treat themselves as dismissed if a relevant transfer involves a substantial change in working conditions which is to the employee’s material detriment. The EAT held that "detriment" should be considered using the subjective approach which applies in discrimination law. The case will be particularly important to purchasers of businesses and transferees in outsourcing situations where transferred employees are required to move location after the transfer takes place.

What happened in this case?

Ms Tapere worked for Lewisham Primary Care Trust in the Procurement Team based in Camberwell, London. Her employment was transferred to the Respondent, South London & Maudsley NHS Trust under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). Her terms and conditions were to remain the same but her place of work changed from Camberwell to Beckenham. Ms Tapere objected to the change in place of work as this increased her journey time by 10 miles and made childcare arrangements more difficult. She lodged a grievance to this effect and on return from holiday, found her colleagues had moved without her into the new offices in Beckenham. She was upset and went off sick before lodging a further grievance and eventually resigned claiming unfair dismissal.

The Tribunal found that a mobility clause in Ms Tapere’s contract could require Ms Tapere to work at any location “within the Trust”. The Tribunal said that this should be interpreted as meaning the transferee’s own geographical locations and accordingly the transferee was entitled to require Ms Tapere to move to Beckenham under the terms of her contract. Under Reg 4(9) of TUPE an employee can treat his or her contract as terminated where a TUPE transfer involves a substantial change in working conditions to the employee’s material detriment. The Tribunal also ruled that the journey time was not materially longer, and viewing this objectively, there was no substantial change to Ms Tapere’s detriment under Reg 4(9) of TUPE.

The Employment Appeal Tribunal (EAT) overturned the Tribunal’s decision.

Mobility Clause - The requirement to work at locations “within the Trust” were plainly words which restricted the geographical area of the mobility clause. These words had to be construed at the point that the contract was entered into; this was different to the interpretation of terms such as those relating to share options where a transferee might be able to use a “substantial equivalence” argument to defend breaches of pre-transfer terms where honouring the original terms would present practical difficulties. The transferee was therefore not entitled under the terms of Ms Tapere’s contract to require Ms Tapere to move to Beckenham.

Substantial change in working conditions to the employee’s material detriment (Reg 4(9)) - "Working conditions” means not only the physical conditions from a health and safety or environmental point of view, but also contractual terms and conditions. Whether there has been a change in working conditions is a question of fact. Whether it is substantial is also a question of fact and the Tribunal must consider the nature as well as the degree of the change. The change in working conditions must be to the material detriment of the employee. “Detriment” should be construed from a subjective point of view (following the same principles as those applicable in the field of discrimination law as set out in Shamoon v RUC). In other words, the Tribunal should have considered the impact of the proposed change from the employee’s point of view. The questions that ought to have been asked were whether the employee regarded the factors such as disruption to childcare and a longer journey, as detrimental and, if so, whether that was a reasonable position for the employee to adopt. The Tribunal had wrongly used an objective test to determine this issue.

The EAT found that Ms Tapere had been constructively dismissed and was entitled to treat herself as dismissed under Reg 4(9) of TUPE. The question of fairness and redundancy pay were re-admitted to a fresh Tribunal.

What does this decision mean for employers?

This case will be important to purchasers of businesses and transferees in outsourcing situations where transferred employees are required to move location after the transfer or service provision change takes place. The transferee will be bound by the terms of the employees’ mobility clauses which will be interpreted in accordance with the parties’ intentions at the time the contract was entered into. Hence, for example, if the mobility clause allows the employer to transfer the employee’s place of work to any Group Company’s place of business, the term “Group Company” may be interpreted by reference to the transferor’s group, depending on how the contract has been drafted. Employers should therefore only seek to rely upon mobility clauses where, in the light of these factors, they clearly cover the intended relocation.

As regards whether an employee can claim dismissal under Reg 4(9) TUPE, transferees wishing to use mobility clauses in order to require transferred employees to move location after the transfer are advised to consult employees about the change and listen carefully to their objections (this will be relevant to the employer's fair handling of the matter should it later progress to an unfair dismissal claim). The transferee should consider whether the employee’s position is a reasonable one to adopt. If the transferee requires the employee to move location and the employee decides to treat himself as dismissed (as in the above case), the employee need not give any notice (and there is at that point no obligation on the employer to pay in lieu of notice). The employee will be entitled to claim unfair dismissal and in the majority of cases the dismissal will be for a transfer-related reason and so will be automatically unfair unless the transferee is able to show an economic, technical or organisational reason for it (which may, in fact, be the case).

Where the employee also objects to becoming an employee of the transferee under Reg 4(7), his employment will not transfer to the transferee and his claim for unfair dismissal will be against the transferor. This means that the transferor, who is under a duty to inform the transferring employees of any “measures” which he envisages the transferee will take after the transfer, might be faced with objections from those employees about any proposal to move location after the transfer. The transferor is not under a duty to consult about those measures but may decide to do so if the employees object to being transferred to the transferee for this reason.

In a case where the mobility clause does not cover the intended move, or there is uncertainty about this, or where employees raise what appears to be a valid argument that being relocated pursuant to such a clause represents a substantial and detrimental change, the transferee will have no real alternative but to proceed on the basis that the employee is redundant, and undertake appropriate consultations.