In a recent decision, the Employment Appeal Tribunal (EAT) considered who was liable for an employee’s dismissal, in circumstances when the employee has objected to the transfer of his employment under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).
London United Busways Ltd v De Marchi and another [2024] EAT 191
Facts of the case
The claimant, Mr DM, was employed as a bus driver by London United Busways Limited (LUB). He lived around 15 minutes’ walk away from the depot at which he started and finished his shifts. As a result of a re-tendering exercise, Abellio London Limited (AL), took over Mr DM’s bus route. All drivers assigned to the route were due to transfer to AL, unless they objected. AL planned to run the bus out of another depot, which was around an hour’s commute from Mr DM’s home.
Mr DM objected to the transfer of his employment to AL and requested to be made redundant, which was refused by LUB. He indicated in correspondence that he did not wish to transfer to AL and did not want to sign a new contract he was offered with LUB, which would have enabled him to remain based at the same garage but with a longer shift.
LUB subsequently confirmed that Mr DM’s employment would terminate on the transfer date due to his objection to the transfer, and that it would be treated as a resignation rather than a dismissal. In response, Mr DM said that he had not resigned but would not sign a new contract with LUB or transfer to AL.
Following the transfer on 9 November 2019, LUB and AL disagreed over the position with Mr DM’s employment. Mr AL remained absent on sick leave throughout. AL eventually accepted that Mr DM’s employment had transferred to it and terminated his employment after he failed to respond to correspondence.
Mr DM brought claims against both LUB and AL. The employment tribunal held that he had been dismissed by LUB on 8 November 2019. Both LUB and Mr DB appealed the tribunal’s decision.
EAT decision
The EAT dismissed the appeals, upholding the tribunal’s conclusion that Mr DM had been dismissed by LUB but applying slightly different reasoning.
- If a TUPE transfer would involve a substantial change in working conditions to the material detriment of an employee whose contract of employment is due to transfer, that employee is entitled to treat the contract as being terminated but is not obliged to do so.
- If the employee chooses to exercise that right prior to the transfer, they are treated as having been dismissed by their employer (the transferor). If they exercise the right post-transfer, they are treated as having been dismissed by the new employer (transferee).
- If the employee elects not to exercise their right to treat the contract as terminated, their employment is transferred to the new employer (transferee) unless they have objected to doing so.
- If the employee objects to becoming employed by the transferee and the transfer would involve a substantial change in working conditions to their material detriment, the employee’s employment does not transfer. Instead, their contract is terminated, and they are treated as being dismissed by their employer (transferor), against whom any claim must be brought.
The EAT therefore concluded that even though Mr DM had elected not to terminate his contract, in circumstances where he had been entitled to do so (due to the change of depot), the effect of his objection to the transfer was that his contract with LUB terminated and he was treated as having been dismissed by LUB prior to the transfer. Any claim therefore had to be pursued against LUB rather than AL.
The Birketts view
This is a complicated and technical decision from the EAT, which highlights in particular the complexities that apply to a TUPE situation when any of the affected employees object to the transfer.
If an employee asserts that a transfer will lead to a substantial change in their working conditions, which they consider is to their material detriment, they may elect to resign and claim against either the transferor (pre-transfer) or transferee (post-transfer). However, if they also indicate an objection to the transfer, their employment will be deemed to have terminated immediately prior to the transfer, and they will be treated as having been dismissed by their employer. It will then be for the employer to prove that the dismissal was fair.
How must an employee’s objection be communicated? There is no required format; it is sufficient for the employee to indicate a clear objection to the transfer, which Mr DM had done by consistently stating in correspondence that he would not accept the transfer to AL.
In circumstances where the new employer is proposing to make changes that could be regarded by the transferring employees as being to their material detriment, there is a risk that the original employer may be left to defend any claims. This highlights the importance of ensuring that the commercial agreement between the parties incorporates sufficient protections, including who will shoulder the costs of any claims related to the transfer.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at January 2025.