Nationwide Building Society v. Benn & Ors

An employment tribunal must give parties a fair opportunity to address any issue on which it proposes to rely. It cannot treat an unpleaded and unargued breach of TUPE’s consultation provisions as establishing contractual breach or unfairness under section 98(4) of the Employment Rights Act 1996.

Changes in job functions affecting transferred employees may constitute changes in the workforce for an economic, technical or organisational reason under regulation 7(2) of the Transfer of Undertakings (Protection of Employment) Regulations 2006. Such changes need not affect the whole workforce. Consultation remains relevant to fairness under section 98(4).

Nationwide Building Society appealed against an Employment Tribunal decision concerning claims arising after the transfer of the Portman Building Society undertaking to Nationwide. The tribunal found that two sample claimants had been constructively dismissed, or alternatively dismissed under TUPE regulation 4(9), for an economic, technical or organisational reason entailing changes in the workforce. It held the dismissals unfair under section 98(4) of the Employment Rights Act 1996, relying substantially on an alleged failure to consult under regulation 13(6).

The claimants cross-appealed the finding that the dismissals were for an ETO reason. The central issues were whether the tribunal had relied impermissibly on the consultation point, whether regulation 4(9) applied, and whether changes affecting only transferred employees could constitute changes in the workforce.

1. Appeal allowed in part. The finding that the dismissals were unfair under section 98(4) of the Employment Rights Act 1996 was set aside, together with the references to TUPE regulation 13(6). The claims were remitted to the same Employment Tribunal to determine whether the dismissals were fair or unfair.
2. The Employment Tribunal acted contrary to natural justice by relying on an alleged breach of regulation 13(6) which was not pleaded, included in the agreed issues, or raised at the hearing. Neither side had been given an opportunity to adduce evidence or make submissions on it. The principle applies generally and is not confined to discrimination cases.
3. The claimants had no standing to bring a regulation 13(6) complaint on the facts and statutory scheme. Regulation 15 defined and restricted who could present such a complaint, and regulation 16(1), read with section 205(1) of the Employment Rights Act 1996, made the statutory tribunal complaint the sole remedy.
4. The findings of fundamental contractual breach were not contaminated by the consultation reasoning. The diminution in job functions and, for Mr Smith-Galer, the substantial reduction in bonus earnings supported dismissal under regulation 4(9), whether constructively or by operation of that provision.
5. The ETO finding was upheld. An organisational reason affecting transferred employees may entail changes in the workforce under regulation 7(2); change throughout the entire workforce is unnecessary.
6. Consultation could still be considered, collectively and individually, when assessing fairness under section 98(4). The extent and nature of consultation were matters for the remitted tribunal.

• Employment Appeal Tribunal: Appeal allowed in part. The unfair-dismissal finding was set aside and the fairness issue under section 98(4) was remitted.
• Employment Tribunal: Found the sample claimants constructively dismissed, or alternatively dismissed under TUPE regulation 4(9), for an ETO reason under regulation 7(2), but unfairly dismissed under section 98(4).