The EAT has given further helpful guidance on determining whether a variation to terms and conditions after a services transfer pursuant to TUPE 2006 falls within the ambit of Regulation 4(4) and Regulation 7(1) (automatically unfair dismissal for a reason connected with the transfer) of TUPE 2006. The decision in Enterprise Managed Services Ltd v Dance is arguably of greater relevance in today’s work environment than that in Smith v Brooklands (also reported this month) since it concerns re-tendering between contracting businesses. However, the EAT in Dance follows the same approach as that in Brooklands (unsurprising since the leading judgment was given by HHJ McMullen in both cases).
In this case, Mr Dance and others were employed by Williams which, along with another contractor, Enterprise, provided services to MHS. From around October 2008 meetings were held between MHS and its contractors emphasising, amongst other concerns, budgeting constraints and the requirement that future services would have to be provided at reduced cost but achieve high service performance. Both Williams and Enterprise depended on MHS for the supply of work. In January 2009 Enterprise reviewed terms and conditions for its workers, introducing performance related pay and different hours. These altered terms were accepted by its staff. Williams made no changes but lost the contract and Mr Dance and others transferred by operation of TUPE to Enterprise in April 2009.
Enterprise made it clear from the outset that it would review the inherited business and consult fully over any changes which, in due course, it did. Mr Dance and 20 colleagues did not agree the changes and they were dismissed.
HHJ McMullen, adopting the same approach as in Brooklands, stated that the real issue was whether the dismissals were connected with the transfer. Overturning the tribunal’s majority decision, he agreed with the dissenting employment judge and Enterprise that the change that Enterprise had introduced was driven by the need for productivity, that the changes were necessary before the transfer and were not connected with it. Harmonisation was driven by the success of the productivity changes that pre-dated the transfer. HHJ McMullen stated ‘it seems to us that since it is open to an employer to effect productivity changes in accordance with the ordinary law, this does not become unlawful when there has been a relevant transfer if the reason is connected to that drive for productivity changes’. The EAT remitted the case to a differently constituted tribunal for consideration.
This is of course a very welcome decision for employers engaged in tendering processes. However, it is unlikely that it will always be clear where changes are driven by a need to harmonise in itself or for a reason (such as productivity) which is not connected with the transfer. This decision does not give a green light to contractors to change terms and simply claim these changes were made for productivity/ economic reasons. However if there is a link to earlier reorganisation to streamline the business and make it more effective, it is likely that this decision can be relied on.