Spaceright Europe Ltd v Baillavoine & Anor

Under regulation 7(1) of Transfer of Undertakings (Protection of Employment) Regulations 2006, a dismissal before a relevant transfer can be connected with that transfer even if the particular transfer or transferee was unknown or not contemplated when the dismissal occurred. Once dismissal and transfer are established, the tribunal objectively determines the reason and connection from the evidence, assisted by industrial experience. The ETO exception applies only where the reason entails an intended workforce change while the business continues as a going concern. It does not apply where dismissal is intended to make the business more attractive for sale.

Spaceright appealed against the Employment Appeal Tribunal’s dismissal of its appeal from an Employment Tribunal decision. The Employment Tribunal had upheld Mr Baillavoine’s claim for automatic unfair dismissal after administrators dismissed him before selling the business and assets of his employer to Spaceright. The Employment Appeal Tribunal dismissed the appeal under UKEAT/0339/10/SM. The appeal concerned alleged perversity, the construction of regulation 7(1) of Transfer of Undertakings (Protection of Employment) Regulations 2006, and the economic, technical or organisational reason defence. The central issue was whether a dismissal could be connected with a later relevant transfer when no particular transferee or transaction was identified at the dismissal date.

The appeal was dismissed. Lord Justice Mummery gave the judgment, with Lord Justice Richards and Sir David Keene agreeing.

1. Perversity. The Employment Tribunal had evidence that the administrators intended to continue trading with a view to selling the business as a going concern and did not regard the claimant as important to the sale. Its finding that the dismissal was transfer-connected was therefore tenable and not perverse.
2. Construction of regulation 7(1). The statutory inquiry arises only where both a dismissal and a relevant transfer have occurred. The tribunal must then determine objectively the reason for dismissal and whether it was connected with the transfer. A particular transfer or transferee need not have been in existence, identified or contemplated when dismissal occurred. The court preferred the approach in Harrison Bowden v Bowden [1994] ICR 186 and Morris v John Grose [1998] ICR 655 to that in Ibex Trading v Walton [1994] ICR 907. The approach in CAB Automotive Ltd v Blake & Anor [2007] UKEAT/0298/07 was consistent with that conclusion. Amicus & Anor v Dynamex [2009] ICR 511 was distinguishable because the dismissals there were made independently of any transfer.
3. ETO defence. An economic, technical or organisational reason is available only where there is an intention to change the workforce and to continue conducting the business as a going concern. It is unavailable where the dismissal is intended to facilitate or improve a sale to prospective transferees. The principles discussed in Berriman v Delabole Slate Ltd [1985] ICR 546 and Whitehouse v Chas A Blatchford & Sons Ltd [2000] ICR 542 were consistent with that approach.
4. The claimant’s dismissal was for a reason connected with the subsequent transfer, but not for an ETO reason entailing changes in the workforce. It was automatically unfair, and Spaceright was liable under TUPE as transferee.

1. Court of Appeal (Civil Division): On 14 December 2011 dismissed Spaceright’s appeal, affirming the decision below: [2011] EWCA Civ 1565.
2. Employment Appeal Tribunal: On 4 February 2011 dismissed Spaceright’s appeal from the Employment Tribunal: UKEAT/0339/10/SM.
3. Employment Tribunal: Decision sent on 30 March 2010. The claim for automatic unfair dismissal was upheld.