XEROX Business Services Philippines Inc Ltd v Zeb

On a relevant transfer, Transfer of Undertakings (Protection of Employment) Regulations 2006 preserve an employee’s existing contractual rights. They do not confer an additional unilateral right to relocate with the transferred work while retaining existing pay. A contractual variation requires agreement under ordinary contractual principles.

For redundancy, the tribunal must ask whether the employer’s requirement for employees to do work of the relevant kind at the place where the employee was employed ceased or diminished, and whether that was the principal reason for dismissal. It must not confuse that question with whether suitable alternative employment should have been offered when assessing fairness.

The claimant worked in a Finance Accounting Team at Wakefield. The Xerox group transferred that function to Manila. The parties accepted that the move was a relevant transfer under Transfer of Undertakings (Protection of Employment) Regulations 2006.

The claimant did not object to the transfer. He said he would relocate to Manila if he retained his United Kingdom terms, including salary. The transferee would employ him in Manila only on local terms. It dismissed him after rejecting his proposal.

The Employment Tribunal upheld his unfair-dismissal claim. It held that his contract had been varied to permit relocation to Manila on United Kingdom terms and that the dismissal was not for redundancy. The employer appealed.

1. Appeal allowed. The Employment Tribunal erred in finding that the contract had been varied so that the claimant was entitled to work in Manila on his existing United Kingdom salary.

2. Regulation 4 of Transfer of Undertakings (Protection of Employment) Regulations 2006 carried the claimant’s existing rights and duties to the transferee. It preserved both his Wakefield work location and his salary. It did not require the transferee to employ him in Manila at that salary.

3. There was no contractual variation. The claimant proposed relocation on his existing terms, while the transferee offered relocation only on local terms. There was no meeting of minds. Regulation 4 permits a variation only consistently with its terms and does not displace the ordinary requirement for agreement.

4. The Tribunal also applied the wrong approach to redundancy. Under section 139(1)(b)(ii) of the Employment Rights Act 1996, it had to determine whether the employer’s requirement for Finance Accounting employees at Wakefield had ceased, and whether that cessation was the principal reason for dismissal. Its own findings were consistent with cessation, because the entire function moved to Manila. The reason why the employer declined to employ the claimant elsewhere was distinct from the reason for termination. Alternative employment instead bears on fairness under section 98(4).

5. An Employment Tribunal considering dismissal in a TUPE case should address regulation 7. A genuine business cessation or reorganisation entailing workforce changes may fall within regulation 7(2), in which event the dismissal is treated as redundancy or another substantial reason and fairness is assessed under section 98(4).

6. The EAT could not itself substitute redundancy as the reason because that would require factual assessment. The case was remitted to a differently constituted Employment Tribunal to decide the reason for dismissal and fairness under section 98(4), taking regulation 7 into account. A conditional costs order of £1,250 was made against the claimant, enforceable only from any compensation awarded to him.

• Employment Appeal Tribunal: Allowed the employer’s appeal and remitted the reason-for-dismissal and fairness issues to a differently constituted Employment Tribunal.
• Employment Tribunal (Leeds): By judgment dated 8 January 2016, upheld the claimant’s unfair-dismissal complaint.