In Nationwide Building Society v Benn and others the EAT ruled that the dismissals of Mr Benn and some of his colleagues fell within the ETO (economic technical or organisational) exception of the TUPE Regulations where the difference in product range of the transferee company entailed a change in the workforce. This was a section of the workforce, being the transferred employees, not the whole of the workforce.

Mr Benn’s employment with Portman Building Society transferred to Nationwide Building Society on 28 August 2007. The former PBS employees contended that their terms of employment were altered to their detriment by NBS. Their job role and responsibilities were downgraded when they were assimilated into NBS roles. The NBS bonus scheme which was to replace their PBS bonus scheme was substantially less beneficial to them. As a result, Mr Benn and several of his transferred colleagues resigned.

The EAT agreed with the tribunal that both a diminution in the role that Mr Benn and others were expected to do and potential reduction in bonus resulted in their constructive dismissal. In doing so they applied Regulation 4(9) of TUPE (‘a substantial change to the employee’s working conditions to their material detriment’). However NBS’s narrower product range was an organisational reason entailing a change in the workforce. The EAT disagreed with the tribunal’s contention that the ETO reason must entail a change in the workforce as a whole. It applied even though the change was only to the job functions of a body of transferring employees.

The EAT further disagreed with the tribunal’s finding that there had been a breach of Regulation 13(6) (consulting appropriate representatives where measures are intended). No claim under regulation 13(6) had been pleaded and it would have been contrary to the principles of natural justice to decide on this point without letting the parties make submissions.

This case is interesting and of practical importance since it is generally understood that harmonisation in itself cannot satisfy the ETO exception. Here, however, the difference in PBS’s and NBS’s operational structures satisfied the ETO test even though the change in function only affected a group of the transferring employees, not the workforce as a whole.