Manchester College v Hazel & Anor looks at when a dismissal relating to harmonisation of terms after a TUPE transfer will be fair, and when it is not, the appropriate remedy. The case arose after a contract for provision of education in the prison service was transferred under TUPE to a new provider. After the transfer, the new provider discovered expenses which had not been uncovered during due diligence prior to transfer and started a cost-cutting process. After asking for volunteers for redundancy, it then sought to change contract terms for some of the transferred employees to harmonise terms and conditions – this involved significant pay cuts. Cases were brought by two of the employees affected, Miss Hazell and Mrs Huggins, who refused to agree the changes and were dismissed for their refusal. They were then offered new contracts at reduced rates, which they accepted. However, they also made unfair dismissal claims in relation to their old contracts. The Employment Appeal Tribunal first looked at the fairness of the dismissals. While the harmonisation was an “economic, technical or organisational” reason for dismissal – it did not entail a change in the workforce, and so fell outside the scope of that defence. While there happened to have been recent redundancies the harmonisation was a separate issue and did not make a change to the workforce employed. Because the dismissals were for a reason connected to the transfer, they were automatically unfair.
His Honour Judge McMullen QC summarised the court’s view of the matter as follows:
In our judgment, the findings in relation to timing are ones of fact for the Tribunal. It was required to look into the mind of the actors in this drama and decide what it was [that] caused the dismissal of the Claimants. At the stage when they were given their notice and were dismissed it was because they refused to accede to the new terms; new terms is not a change in the workforce, and so the Employment Tribunal majority was correct in its construction of TUPE. Its application following the findings of fact that it made was open to it. That means the dismissals were automatically unfair; they do not therefore have to be dealt with under section 98(4) [… the determination of the question whether the dismissal was fair or unfair (having regard to the reason shown by the employer)…depends on whether in the circumstances (including the size and resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and…shall be determined in accordance with the equity and substantial merits of the case].
The Employment Appeal Tribunal went on to consider the question of remedy; the claimants had successfully sought re-engagement from the Employment Tribunal on their old terms. While reinstatement or re-engagement can be requested by employees in unfair dismissal cases, they are very rarely ordered – usually because the employer argues that it is not practicable for the employee to return to work because trust and confidence has broken down, or because so much time has passed since the dismissal. The Employment Appeal Tribunal upheld the tribunal’s decision to award re-engagement rather than compensation in this case.
This decision gives a very effective remedy to employees who reluctantly accept re-employment on less favourable terms in a TUPE related harmonisation. In the light of proposals to cut the cap on unfair dismissal awards, it may be that there is a resurgence of requests for reinstatement and re-engagement, which were, after all, originally envisaged as the primary remedy for unfair dismissal.