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Significant new EAT judgment on TUPE, Unfair Dismissal Claims and Collective Rights

The importance of the EAT’s judgment in Nationwide Building Society v Benn and others UKEAT/0273/09/JOJ [Judgment handed down on 27/7/10] lies in the fact that it appears to be the first time that the EAT has considered the inter-relationship between the collective rights provided for by TUPE and an individual’s claim of unfair dismissal.

By its Judgment the EAT [Slade J, Mr Bleiman and Mr Worthington]: (i) places limits upon the relevance of any breach of collective rights to individual claims of unfair dismissal; (ii) extends the Mercy  principles to TUPE cases and (iii) holds that it is not necessary for an ETO reason to be made out for the changes made to be changes which affect the entirety of the workforce.

The Tribunal below had relied upon its finding that there had been a breach of Regulation 13(6) of TUPE in support of its conclusion that the seventeen respondents had been unfairly dismissed.

The respondents had all resigned following their transfer from Portman Building Society to the Nationwide in 2007.  They relied upon what they contended were various changes to their terms and conditions said to result in a position in which their earning potential was significantly reduced.

In upholding their claims of unfair dismissal however the Tribunal’s principal criticism of the Nationwide related to the process by which the transfer had been conducted and, specifically, it set out various criticisms of a ‘job-mapping’ process that had been followed.

The EAT upheld the appeal on the following grounds:

(i)      No claim under Regulation 13(6) had ever been pleaded. The principles set out by the EAT in Tarbuck v Sainsburys Limited [2006] IRLR 664 should not, as was submitted by the Respondents, be limited to discrimination cases;

(ii)    The approach of the Court of Appeal in respect of the collective consultation provisions contained in the TULRCA 1992 as set out in Mercy v Northgate HR Ltd [2008] ICR 411 was to be applied equally in respect of a claim for breach of the information and consultation provisions of TUPE; and

(iii)   Perhaps most significantly of all, the EAT held that “Regulation 13(6) is not directly applicable to assessment of the fairness of a dismissal where no breach has been established by a successful claim”.

The EAT’s judgment is also of fundamental importance for its rejection of the respondents’ cross-appeal against the finding of the Tribunal below that their dismissals were for an organisational reason entailing changes in the workforce within the meaning of Regulation 7(2). The respondents relied upon a hitherto popular view that for an ETO to be made out the change in question had to affect the entirety of the workforce and not just the transferring employees. The EAT rejected this submission. It was sufficient for the organisation change to affect simply a group of the transferring employees, indeed the change in question does not even need to extend to all the transferring employees.

The case was remitted to the same Tribunal for it to consider whether the dismissals were fair or unfair within the meaning of ERA section 98(4).

Chris Quinn, instructed by Daniel Aherne and Luke Pardey of Olswang LLP, appeared on behalf of the successful Appellant.

Click here for a link to the judgment.