Whitehouse v Chas A Blatchford & Sons Ltd

Under Regulation 8 of the Transfer of Undertakings (Protection of Employment) Regulations 1981, a dismissal is automatically unfair where the transfer is the sole or principal reason. The exception for an economic, technical or organisational reason entailing changes in the workforce applies where the reason is connected with the future conduct or reconfiguration of the business. The transfer may be the occasion for dismissal without being its reason. The court should examine the facts rather than attempt to define exhaustively every qualifying economic or organisational reason. The Directive safeguards employees’ existing rights on a transfer; it does not place them in a better position than they would have occupied without the transfer.

Mr Whitehouse was employed by Stubbs, which supplied prosthetic services to a hospital under a contract. The hospital awarded the successor contract to Chas A Blatchford & Sons Ltd, subject to reducing the number of technicians from 13 to 12. Blatchford took on Stubbs’s employees, selected Mr Whitehouse for redundancy and dismissed him.

The Employment Tribunal held that the dismissal resulted from an economic or organisational reason entailing a change in the workforce and that the selection was fair. The Employment Appeal Tribunal dismissed his appeal by a majority, distinguishing Wheeler v Patel and other authorities. The issue before the Court of Appeal was whether the reduction in staffing was connected with the transfer, or instead resulted from an economic or organisational requirement affecting the future conduct of the business.

1. Appeal dismissed. The transfer preserved Mr Whitehouse’s employment contract and his right not to be unfairly dismissed. It did not itself terminate his employment.
2. Regulation 8(1) applies where the transfer is the reason or principal reason for dismissal. Regulation 8(2) removes that consequence where an economic, technical or organisational reason entailing changes in the workforce is the reason or principal reason.
3. Per Lord Justice Beldam, “economic” should be understood in the context of reasons connected with the future conduct of the business as a going concern. The court should not attempt to prescribe every circumstance capable of satisfying the exception.
4. Per Lord Justice Buxton, Article 4 of Directive 77/187/EEC prevents dismissal by reason of the transfer, but leaves dismissals otherwise justified under national law available. The Directive safeguards existing employment rights and does not create a Community-law right to continued employment beyond national law.
5. The hospital’s requirement that the services be provided by 12 rather than 13 technicians reconfigured the future business. It would have applied whoever held the contract. The transfer was therefore the occasion, not the reason, for the reduction and dismissal.
6. The formulation in Wheeler v Patel was helpful and applicable, but was not a statutory formula capable of resolving every case. The tribunal was entitled to find an economic or organisational reason and a fair redundancy selection.
7. Mr Justice Jonathan Parker agreed. He added that the restrictive construction advanced by the appellant would improperly place an employee in a better position because of the transfer, contrary to the purpose of the Directive and domestic legislation.

Appeal dismissed with costs. Leave to appeal to the House of Lords refused.

• Court of Appeal (Civil Division): appeal from the Employment Appeal Tribunal dismissed with costs; leave to appeal to the House of Lords refused.
• Employment Appeal Tribunal: appeal dismissed by a majority.
• Employment Tribunal: claim for unfair dismissal dismissed; the redundancy reason and selection process were found fair.