TUPE: an example of when terms and conditions are permitted to be changed post-transfer

Summary

The Employment Appeal Tribunal has given a rare judgment on a case where an employer was permitted to change employee’s contract terms and conditions after a TUPE transfer. Regulation 4(4) provides that post-transfer changes to terms and conditions will be void if it is deemed because of the transfer itself. The case illustrates an example of when such a change is permitted under regulation 4(4). Tabberer and others v Mears Limited and others

Facts

The employees, a group of electricians working on social housing, were originally employed by Birmingham City Council. They were entitled to be paid Electricians’ Travel Time Allowance (“ETTA”) to compensate them for the loss of a productivity bonus caused by the need to travel to different depots. This had been in existence since 1958, where there were up to 40 depots. Most of these are now closed and productivity bonuses were phased out.

The employees were subject to a number of TUPE transfers and although their new working practices obviated the need for ETTA they continued to receive it because it was considered a legal requirement. When the employees transferred to Mears Ltd in 2008, Mears ceased payments to ETTA and some of the electricians were successful in bringing a claim for unauthorised deduction of wages. Following the determination, Mears gave notice to the employees that it was ending ETTA from all contracts from September 2012.

The employees argued that the variation of their terms of employment was void under regulation 4(4) of TUPE and brought for claims of unlawful deductions from wages. The Employment Tribunal in the first instance found that the reason for the contractual variation was not a transfer to Mears but the fact that ETTA was an outdated and unjustified allowance. In addition, they found most of the employees had not met the conditions for its payment, since it had not submitted a claim form for the allowance. The employees appealed to the Employment Appeal Tribunal.

Outcome

The Employment Appeal Tribunal found that the previous litigation had been the context for the decision to vary the contract but not the reason for it. It had found that the reason was to end the entitlement was the belief it was outdated and this did not link back to the transfer. When management had faced the issue previously they had decided to continue this payment notwithstanding the view that it was unjustified. The belief of the payment being outdated and unjustified did not arise purely on the occasion of or because of the transfer, it was a pre-existing belief.

Implications for Employers

This case illustrates a rare example of a permitted change of terms and conditions following a TUPE transfer. The pertinent question asked by the Tribunal in this situation is what was the reason the transferee acted as it did? In this case it was clear that the underlying reason for the change was one which would have applied regardless of the transfer and was therefore permitted.

Employers must act with caution when considering changing terms and conditions after a TUPE transfer and this case shows that it is only where a change would have applied regardless of any transfer. It is useful to see an example of this in practice.

It is important to note that regulation 4(4) of TUPE was amended in 2014, which states that post-transfer changed will be void if the sole or principal reason for the change is the transfer. This claim pre-dates the changes. However, academics say that it is likely that the same outcome would have been reached with the latest amended provision.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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