Smith & Others v Trustees of Brooklands College

Under regulation 4(4) of the Transfer of Undertakings (Protection of Employment) Regulations 2006, a consensual variation of employment terms is void only where the transfer, or a reason connected with it, is the sole or principal reason. The test is not whether the variation would have occurred but for the transfer. The tribunal must determine the employer’s actual reason, assessed from the relevant objective and subjective circumstances. The passage of time is relevant, but there is no fixed time limit. Harmonisation following a transfer may remain connected with it. Conversely, an employer may correct an anomalous payment practice after a transfer where the operative reason is an independently reached belief that the terms are out of step with normal practice.

Four teaching and learning assistants were employed by Spelthorne College under agreed salary arrangements which treated them more favourably than ordinary part-time workers. Their employment transferred to Brooklands College in August 2007. In 2010, Brooklands agreed with them a phased reduction in pay after its human resources director concluded that their method of payment was an erroneous departure from normal sector practice.

An Employment Judge found that the variation was not made for a reason connected with the transfer and dismissed the claims for unauthorised deductions. The claimants appealed, arguing that the transfer had caused the review and variation. The central issue was whether regulation 4(4) applied.

1. Appeal dismissed. The Employment Judge had correctly identified the question under regulation 4(4) and had made findings of fact open to him.
2. The statutory inquiry is not a but for test. The relevant question is the reason which caused the employer to make the variation. The fact that the claimants came within the responsibility of the new employer, and would not otherwise have been reviewed, did not establish the necessary connection.
3. The assessment of the employer’s reason is primarily factual. The tribunal may consider both objective and subjective circumstances, including the time elapsed since the transfer and the decision-maker’s state of mind. There is no fixed period after which a variation becomes permissible.
4. The Judge accepted that the real reason was the HR director’s belief that the claimants’ pay was anomalous and inconsistent with ordinary part-time payment practices. Although that belief was based on a mistaken conclusion that the original agreement was an error, the operative reason was independently identified and was not the transfer or a reason connected with it.
5. The authorities did not prevent an employer from seeking agreed changes after a transfer, provided the transfer or a connected reason was not the sole or principal reason. The agreed variations were therefore valid and effective.

• Employment Appeal Tribunal: appeal from the corrected reasons of Employment Judge Livesey, given on 3 June 2011. The appeal was dismissed.