Osborne & 29 Ors v Capita Business Services Ltd & 3 Ors (Transfer of Undertakings)

For the exception in Regulation 7 of Transfer of Undertakings (Protection of Employment) Regulations 2006 to apply, the tribunal must identify the employee’s actual sole or principal reason for dismissal and decide whether that reason entailed a change in the workforce. A planned and significant redistribution of job functions can meet that requirement, even where alternative employment is offered.

A mere relocation of substantially unchanged work does not entail a change in the workforce. General workforce reductions, or a possibility that the employee might otherwise have lost employment, cannot displace a finding that the actual reason for dismissal was relocation. Such a dismissal is automatically unfair where it is connected with the transfer.

The London Borough of Barnet outsourced services to Capita in a service provision change. The Claimants’ employment transferred under Transfer of Undertakings (Protection of Employment) Regulations 2006. Capita subsequently dismissed employees whose former roles had been redistributed, split or relocated.

The Watford Employment Tribunal held that, save for one employee, the dismissals were for economic, technical or organisational reasons entailing changes in the workforce. It considered nine lead cases for a wider cohort of 30 Claimants.

The Claimants appealed. They contended that the Tribunal had failed to address Capita’s offer of redeployment, had wrongly treated relocation as an ETO reason, and had erred in the case of Janet Lingard, whose role had moved to Darlington without significant functional change. The central question was whether the actual reasons for the dismissals entailed changes in the workforce.

1. The appeal was allowed only in Janet Lingard’s case. The appeals on the first and second grounds were dismissed. The Employment Appeal Tribunal substituted a finding that Ms Lingard had been automatically unfairly dismissed and ordered the Respondent to pay £1,000 towards appeal fees.

2. The correct approach under Regulation 7 is to identify the employee’s sole or principal reason for dismissal; decide whether it is the transfer itself, connected with the transfer, or neither; and, if connected, decide whether it is an ETO reason entailing changes in the workforce. The latter inquiry requires attention both to the ETO character of the reason and to its effect on the workforce.

3. For the Claimants whose former functions were split and redistributed between locations or people, the Tribunal had made sustainable findings of fact. The splitting of the functions performed under their existing contracts was a significant functional change. It could therefore amount to an ETO reason entailing changes in the workforce. Capita’s promise that affected employees could seek redeployment did not alter that conclusion. It could be material to ordinary unfair-dismissal issues, but it did not determine whether the former contracts and roles had disappeared for the purposes of Regulation 7.

4. A mere change in the location where substantially unchanged work is performed does not entail a change in the workforce. Ms Lingard’s dismissal was found to have resulted principally from the relocation of her role to Darlington. The Tribunal had also found that the changes to her role were not significant. Its reliance on general reductions in staff numbers and functions, and on the possibility that she might not otherwise have retained her job, did not logically establish that her actual dismissal reason entailed workforce change.

5. On the facts found, there was no material distinction from a relocation case in which the employee refuses to move. The only permissible conclusion was that Ms Lingard’s dismissal was connected with the transfer and automatically unfair. Any prospect that she might later have lost employment concerned compensation, not the Regulation 7 issue.

• Employment Appeal Tribunal: Allowed the appeal in Janet Lingard’s case, substituted a finding of automatic unfair dismissal, and dismissed the remaining grounds.
• Employment Tribunal, Watford: Reasons delivered on 22 September 2015. It held that, except in one case, the dismissals were for ETO reasons entailing changes in the workforce.