Changes To Transferring Employees Amounts To A Change In The Workforce

Sun, 28 Nov 2010

In Nationwide Building Society v Benn and ors [2010] IRLR 922 the EAT reviews the meaning of both Regulation 4(9) and Regulation 7(2) of TUPE 2006.
The Claimants are all former employees of Portman Building Society who resigned following the transfer of the business to Nationwide Building Society. They claimed that the term of their employment were altered to their detriment by Nationwide in that their roles and responsibilities were downgraded as a result of being assimilated into what Nationwide contended to be comparable roles. They also complained about changes to their bonus arrangements. The ET upheld their claims but found that the changes made by Nationwide amounted to “an economic, technical or organisational reason entailing a change in the workforce” within the meaning of Regulation 7(2) of TUPE. The ET also found that the proposed changes were both in fundamental breach of the Claimants’ contracts and/or amounted to a substantial change in their working conditions which was to their detriment. 
On appeal it was contended that such a change had to relate to the workforce as a whole rather than just the transferring staff. However, the EAT ruled that an ETO reason entailing a change in the workforce within the meaning of Regulations 7(1) and (2) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 may be relied on by a transferee seeking to harmonise the roles and employment terms of the transferring workforce with those of their own workforce. The EAT also confirms that where the changes are “substantial” these may fall within the scope of Regulation 4((9) of TUPE and amount to a “substantial change in working conditions to the material detriment of a person whose contract is or would be transferred”. (The Appeal was allowed on technical grounds that in breach of the principle of natural justice the ET, in giving its reasons, had referred to a factor which had not been relied on by the parties and on which neither party had been given an opportunity to comment. At the time of writing, this part of the EAT’s ruling is under appeal). 
The EAT ruling appears to open the way to harmonisation of terms and conditions of transferring employees to those of the existing workforce provided this forms part of a restructuring of their roles as opposed to the roles of the workforce as a whole.

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