Under regulation 4(4) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") changes to an employee's contract of employment are void if the sole or principal reason for the variation is the transfer. Pre-2014 this definition was wider and included "reasons connected to the transfer". This case was decided under the wider definition but the outcome is unlikely to have been different.
The Claimants were originally employed by Birmingham City Council and were entitled to Electricians' Travel Time Allowance ("ETTA"). Over the years their employment transferred a number of times, each time constituting a relevant transfer for TUPE purposes. ETTA had been introduced in 1958 to compensate employees who had to travel between various depots and as a result would lose out on productivity bonuses. Over time most of the depots closed and the productivity bonuses were phased out.
In 2008 the employees transferred to Mears Limited. Mears ceased payment of the ETTA arguing that the eligibility criteria had not been satisfied. After litigation in the Employment Tribunal and Employment Appeal Tribunal ("the Salt litigation") it was found that the employees were contractually entitled to the allowance. Following this finding, Mears served notice that the ETTA was ending from September 2012.
The employees argued that this amendment was void under regulation 4(4) of TUPE and brought unlawful deductions from wages claims.
The Employment Tribunal rejected the claims on the basis that the contractual variation was not due to the transfer but instead because the ETTA was an outdated and unjustified allowance. In addition, most of the employees had not met the conditions for payment. The employees appealed.
The EAT agreed with the Employment Tribunal and found that the reason the employer made the contractual variation was because the provision was outdated not because of the transfer itself.
The Salt litigation was part of the context for the decision; it was not the reason for it. In addition, if the Salt litigation formed any part of the Respondent's reason for the variation, it was because it was the confirmation of a contractual entitlement to an outmoded payment, it did not create a connection to the transfer.
There was a pre-existing belief that the ETTA was outdated which did not arise purely on the occasion of the transfer. The EAT clearly states "The important point was that the operative reasoning - the belief that the payment was outdated and unjustified - did not arise purely on the occasion of, let alone because of, the transfer; it was a pre-existing belief or state of affairs".
The contractual variation was therefore found to be valid.
CommentThere is very little case law demonstrating a permitted change to terms and conditions following a TUPE transfer. This case provides a useful example of a contractual variation which would have happened regardless. It is comforting to know that a TUPE transfer does not render terms and conditions untouchable. Where there is a genuine reason to change terms and conditions, unrelated to the transfer, a contractual variation should be permitted