Change of location and TUPE

Tue, 01 Jul 2014

Anthony Korn reviews the EAT’s ruling in Donnelley Global Document Solutions Group Ltd v Besagni and others (EAT/0397/13) and explains why the amendments brought about 2014 TUPE Regulations are likely to have produced a different result.

Under Regulation 4(4) of the 2006 TUPE Regulations an “agreed” change in terms of employment was rendered void if the reason for the change was the transfer itself or a reason connected with the transfer unless the reason for the change was an economic, technical or organisational reason entailing a change in the workforce.

Similarly, the dismissal of an employee who refused to agree to such a change was automatically unfair pursuant to Regulation 7(1)(b) and (2) unless the employer could show an ETO entailing a change in the workforce.

Question: could a change in location amount to an ETO entailing a change in the workforce? The answer given by the EAT in Donnelley Global Document Solutions v Besagni and others (EAT/0397/13) is “no”.

Background facts

The Claimants were employed in the parking enforcement and related services department of the London Borough of Brent. Some were employed in the notice and processing part of the service and others were employed in the post room and payment processing team. The Council decided to outsource the majority of its parking operations. The contract was awarded to NSL. It was proposed that some staff would be transferred to its offices in Croydon and others would work for a sub-contractor’s based in Lancing. The Claimants all indicated that they were not prepared to move to Croydon or Lancing and they were dismissed on grounds of redundancy. The ET held that the reason for their dismissal was that they were not prepared to move to Croydon/Lancing. The issue was whether this amounted to an ETO entailing a change in the workforce under Regulation 7 of the Transfer of Undertakings (Protection of Employment) Regulations 2006. The ET ruled that even if the change amounted to an ETO, it did not amount to a change in the workforce and therefore held the dismissals to be automatically unfair.

EAT ruling

The legal argument  before both the ET and the EAT largely focussed on the correct interpretation of the Court of Appeal’s well-known ruling in Berriman v v Delabole Slate Ltd [1985] ICR 546 that a change in the workforce meant either a change in the numbers employed or a change in their functions (i.e. structural change). The EAT was invited to rule that such structural change could extend to a change in location. It declined to do so. Slade J stated that in her judgment: “’workforce’ is made up of workers, people. ‘Workforce’ is not ‘workplace’ or any other physical or abstract concept such as the way in which work is organised or where it takes place. This would fall within the first limb of Regulation 7(1)(b) as an ETO” but  “the concept of change in location of the employees’ workplace is not included in ‘Changes in the workforce’”.

2014 TUPE Regulations

The dismissals in the present case which took place on 31 May 2012 preceded the implementation of the Collective Redundancies and Transfer of Undertakings (Protection of Employment)(Amendment) Regulations (2014 No 16) on 31 January 2014 (the 2014 TUPE Regulations).

The 2014 TUPE Regulations make three important but controversial changes to the 2006 TUPE Regulations: first, as a result of Regulation 6(1) of the 2014 TUPE Regulations, the words “connected with the transfer” have been removed from Regulation 4(4) and 4(5) of the 2006 TUPE Regulations: variations are only now prohibited if the reason for the change is the transfer itself. Likewise, under Regulation 7, dismissals are only automatically unfair if the reason for dismissal is the transfer itself. In the present case, the change in wording would have had no impact because the transfer itself was the reason for the change in location but the issue of causation may not be quite so straightforward in other cases. Secondly, the expression ‘changes in the workforce’ has now been expressly extended to include “ a change to the place where employees are employed by the employer to carry on the business of the employer or to carry out work of a particular kind for the employer (and the reference to such a place shall have the same meaning as in Section 139 of the [Employment Rights Act 1996]”.  The facts of the present case would appear to fall fairly and squarely within the terms of this amendment. Thirdly, as regards contract variations, Regulation 6(1) also permits such variations where “the terms of the contract permit the employer to make such a variation”, for example, where there is an express (or implied) mobility clause under the contract, though it would seem that an employee still retains the right to make a TUPE type constructive dismissal claim in such circumstances under Regulation 4(9) of the 2006 TUPE Regulations.

However, as is often the case with TUPE, things are not as simple as they seem! It is questionable whether the removal of the words “in connection with the transfer” will make a great deal of difference (other than possibly in insolvency cases) given the interpretation of Article 4 of the Directive by the ECJ in Daddy’s Dance Hall [1988] IRLR 315.  It is well established that Courts and Tribunals are required to interpret domestic law in a manner which is consistent with the Directive, as interpreted by the CJEU.  Likewise, it has been doubted by Professor John McMullen writing in the Industrial Law Journal whether extending a ‘change in the workforce’ to a change in location is compatible with the Acquired Rights Directive and it has been suggested that an agreed variation in such circumstances will continue to be invalid. In the present case, Slade J to some extent echoed these doubts as to the validity of the change to Regulation 7. She observed that whilst there was no decision of the CJEU directly on this point, “in the absence of clear language as that now introduced by the amendment, such an interpretation would go against the grain of TUPE” adding that “the compatibility of the amendment with Directive 2001/23 is not an issue to be considered in this appeal”. 

The message is ‘watch this space’ for further developments.

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