The trouble with Tupe.
| Author | Nickson, Sue |
| Position | Transfer of undertakings (employee rights - Brief Article |
Did they jump or were they pushed? Recent events in employment law are making Tupe transfers a more complex process, especially if it leads to resignations. Sue Nickson takes a reconstructive approach
On one hand, Section 95 (1) (c) Employment Rights Act (ERA) 1996 provides that an employee has been constructively dismissed where he "terminates the contract ... in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct". The tribunals have long construed the "employer's conduct" wording as requiring a fundamental breach of contract on its part before the employee can claim constructive dismissal. Therefore, if an employer exercises a contractual right to vary terms and conditions, even if this is to the employee's detriment, the employee will not be able to make the legal claim of constructive dismissal.
On the other, Article 4(2) of the acquired rights directive provides that, where the contract of employment is terminated because a business transfer involves a "substantial change in working conditions to the detriment of the employee", and the employee leaves as a consequence, the employer shall be regarded as having been responsible for termination of the employment. Regulation 5(5) of Tupe puts that provision into English law, expressly preserving the right of an employee to terminate his employment where a substantial change in working conditions is made to his detriment. So does an employee who quits and sues after a business transfer have to show a fundamental breach of contract, or merely a substantial (but potentially lawful) and detrimental change to his working conditions?
This was considered by the Employment Appeal Tribunal (EAT) recently in Pendragon v Rossiter plc. Mr Pendragon joined Rossiter in the course of a Tupe acquisition. After the transfer, Rossiter exercised its contractual right to vary the calculation of holiday pay. Mr Pendragon was left worse off and he resigned in protest. He claimed that he had been constructively dismissed because the termination of his employment was caused by a substantial and detrimental change in his working conditions. He also claimed that the "dismissal" was connected with the transfer and so was automatically unfair. The Employment Tribunal dismissed his application, saying that he could not claim constructive dismissal as the change had been lawful and, therefore, there had been no breach of contract. He appealed.
There were two grounds...
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