The Manchester College v Hazel & Anor

For the ETO defence under Transfer of Undertakings (Protection of Employment) Regulations 2006, the tribunal must identify the reason for dismissing the particular employee. A collective redundancy programme does not make a dismissal for refusing harmonised terms a reason entailing changes in the workforce. Where redundancies have been resolved and the operative reason is refusal of new terms, the dismissal is automatically unfair.

A Polkey finding which eliminates compensation for ordinary procedural unfairness does not require a tribunal to refuse or reduce re-engagement. Reinstatement and re-engagement are distinct remedies. Practical obstacles to reinstatement may not prevent re-engagement on different terms where compliance is reasonably practicable.

Following a TUPE transfer in August 2009, the college sought savings through voluntary redundancies and harmonisation of inherited terms and conditions. The claimants were told that they were no longer at risk of redundancy, but were subsequently dismissed after refusing substantial salary reductions under new contracts. They later accepted the new terms and continued working.

The Employment Tribunal held by a majority that the dismissals were connected with the transfer and were for an ETO reason, but that the reason for dismissing these claimants did not entail changes in the workforce. It also found the dismissals procedurally unfair and ordered re-engagement on the claimants’ former salaries, frozen until the new pay scale caught up.

The employer appealed both the automatic-unfair-dismissal finding and the remedy. The central issues were whether the ETO defence applied and whether re-engagement was practicable.

1. Appeals dismissed. The Employment Tribunal made permissible findings of fact as to the operative reason for dismissal: the claimants’ refusal to accept the new terms and conditions. That finding was plainly open on the evidence and disclosed no perversity.

2. The statutory enquiry under Regulation 7 is directed to the reason for dismissing the individual claimant, although a transfer may create a collective employment problem. The dismissals were connected with the transfer and the employer had established an economic, technical or organisational reason. However, the required further element was absent. The reason for dismissing these claimants, at the relevant time, was harmonisation of terms and conditions, not a change in workforce numbers or functions.

3. The tribunal was entitled to treat the voluntary-redundancy exercise as having ended before the dismissals. The claimants had been removed from redundancy risk. Later references to possible redundancies did not compel a different factual conclusion. A separate redundancy programme affecting others did not convert these dismissals for refusal of new terms into dismissals entailing changes in the workforce. The dismissals were therefore automatically unfair under Transfer of Undertakings (Protection of Employment) Regulations 2006, Regulation 7(1).

4. The tribunal’s alternative conclusion of ordinary procedural unfairness remained valid, although the automatic-unfair-dismissal finding made it unnecessary to determine fairness under section 98(4). Its conclusion that proper procedure would probably have produced dismissal could affect compensation under Polkey, but did not govern re-engagement.

5. Reinstatement and re-engagement involve different statutory considerations. Reinstatement requires return to the same position, whereas re-engagement may be on different terms. The tribunal could therefore find reinstatement impracticable but re-engagement practicable. Employee or union discontent over preserving the claimants’ former salaries did not make compliance impracticable, particularly as they remained in employment and the employer’s evidence was that it could manage the position. The re-engagement order was upheld.

• Employment Appeal Tribunal: dismissed the employer’s appeals from the Employment Tribunal’s liability judgment, sent with reasons on 16 September 2011, and remedy judgment, sent with reasons on 14 December 2011.
• Employment Tribunal: held the dismissals automatically unfair under Regulation 7(1) of the Transfer of Undertakings (Protection of Employment) Regulations 2006; also found procedural unfairness and ordered re-engagement.