UK: TUPE - changes to terms against background of redundancies not for ETO reason

The fact that a harmonisation of employment terms takes place against a backdrop of possible redundancies does not necessarily mean that the employer can establish a fair "ETO reason" for dismissing any refuseniks and re-engaging them on the new terms.  A tribunal can order re-engagement, in effect reinstating the old terms; where the employee has continued to work for the employer it will be difficult to argue that re-engagement on these terms is impracticable.

Following a TUPE transfer, a transferee sought to make costs savings by requesting voluntary redundancies and harmonising the terms across 37 different sets of terms and conditions.  The claimants were dismissed for refusing the new terms involving a pay cut, and rehired on the new terms.  This was held to be automatically unfair.  The ET made a finding of fact that the claimants were no longer at risk of redundancy when the new terms were proposed.  The reason for the dismissal was refusing the new terms, was transfer-connected and was not for an ETO reason entailing a change in the number or function of the workforce.  The fact that other employees were being made redundant could not support an argument that the dismissal of the claimants was for an ETO reason – it is the reason applicable to the particular individual that matters.  Here the individuals in question were not at risk of redundancy at the time they refused the new terms.

The EAT upheld the ET's decision, deciding that it was entitled to reach those findings of fact and had construed TUPE correctly.  This seems to put to bed the idea of establishing an ETO reason for changes to terms of one individual simply because other employees are being made redundant at the same time. 

It is possible that another tribunal might have made a different finding of fact as to the reason for dismissal, had the claimants themselves still been at risk of redundancy at the time and had the changes to terms been presented as an alternative to redundancy.  The case highlights the fact-sensitive nature of these situations.  In some cases tribunals may also be prepared to find as a fact that harmonisations to achieve costs savings are not transfer-connected in the first place.

The EAT upheld the ET's re-engagement order based on the new terms and conditions with the exception of pay, which was restored to the previous levels and then red-circled, ie frozen until the new pay scale caught up. In fact the transferee had offered this pay protection in negotiations with the union, but withdrawn the offer when agreement could not be reached on other issues.  The EAT agreed with the ET's view that the employer could manage the discontent this would cause in the rest of the workforce and therefore this did not render the re-engagement order impracticable. (The Manchester College v Hazel, EAT)