Employment - Harmonisation of terms following a tupe transfer

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Summary: The EAT has upheld a tribunal decision that two employees were unfairly dismissed after they refused new contracts on inferior pay following a TUPE transfer. It found that re-engagement on their previous salaries was the most appropriate remedy.

In Manchester College v Hazel and another, in August 2009, the claimants transferred to the College, along with 1,500 other employees.  In January 2010, the College made approximately 200 redundancies. The claimants were told that their jobs were safe, but they had to accept new employment contracts with lower salaries. When they rejected the changes, they were dismissed. They were later re-offered the same terms, which they accepted. On their return to work, they brought claims for unfair dismissal.

The tribunal held that as the claimants had been told that they were no longer at risk of redundancy, the harmonisation of their terms was separate from the redundancy.  They were dismissed for refusing to agree to the new contracts, a reason connected to the transfer.  The tribunal accepted that the dismissals were for an economic, technical or organisational (ETO) reason. However, the ETO reason did not entail a change in the workforce. Therefore the dismissals were automatically unfair.

The tribunal made an order for re-engagement on the new terms, but with salaries at the old rate, and a pay freeze until their colleagues had ‘caught-up’ with their salaries.  The EAT considered that re-engagement was an appropriate remedy given that the employees had already returned to work. As such, it was harder for the College to argue that re-engagement was not practicable as the employees retained the trust and confidence of their employer.

Practical points for employers

It is prudent for employers to ensure harmonisation takes place at the same time as the redundancy process, in order for there to be a valid ETO reason entailing changes in the workplace.

The re-engagement order combined with a pay freeze arrangement illustrates that tribunals are becoming increasingly creative in finding solutions to unfair dismissal claims. It also demonstrates that even in instances where an unfairly dismissed employee has accepted a new contract, a tribunal is still capable of re-establishing former terms.

 

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