In the recent case of Hare Wines Ltd v. Kaur, the Court of Appeal considered whether the employee's dismissal on the day of a TUPE transfer for allegedly personal reasons was in fact related to TUPE and so automatically unfair.
Ms Kaur worked as a cashier for H&W Wholesale Limited (H&W), whose directors were Mr Hare and Mr Windsor. She and her colleague, Mr Chatha, had a strained working relationship. In December 2014 it was decided that H&W would cease trading for financial reasons and Mr Windsor and Mr Hare would take on the business and employees of H&W as Hare Wines Ltd. Mr Chatha was to become a director of Hare Wines.
Mr Windsor held meetings with all seven employees of H&W on 9 December 2014. His last meeting was with Ms Kaur. Following the meeting he wrote to Ms Kaur advising that "due to unforeseen circumstances concerning the business, ... it would cease to trade". As a result, they would have to "terminate [her] employment as from today". Ms Kaur was the only employee who did not transfer to Hare Wines Ltd on 9 December. She brought a claim against H&W and Hare Wines Ltd (the Respondents) for redundancy pay, notice pay and, subsequently, for automatic unfair dismissal by reason of the TUPE transfer.
Ms Kaur and the Respondents presented two different versions of the meeting on 9 December. Ms Kaur claimed that she was told by Mr Windsor that she was being dismissed as Mr Chatha and Hare Wines Ltd did not want her to transfer. In contrast, Mr Windsor argued that he had told Ms Kaur that the business was being transferred to Hare Wines Ltd and that she had stated she was not happy working for them and did not want to transfer.
The legal issues
The purpose of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) is to protect the employees' rights when the organisation or service they work for transfers to a new employer.
Under Regulation 7 if the sole or principal reason for a dismissal is a TUPE transfer, the dismissal will be automatically unfair unless the reason is an economic, technical or organisational (ETO) reason entailing changes in the workforce.
The employment tribunal in Ms Kaur's case had to consider whether Ms Kaur was unfairly dismissed having regard to the facts of the case. In order to do that, the tribunal had to decide which version of events it preferred given that the burden of proving that there had been a dismissal was on the claimant (Ms Kaur).
The tribunal's decision
The employment tribunal concluded, on the balance of probabilities, that Ms Kaur did not object to the transfer so was dismissed and went on to decide that the sole or principal reason for the dismissal was the transfer.
Hare Wines Ltd unsuccessfully appealed the tribunal's decision to the Employment Appeal Tribunal and then to the Court of Appeal. One of the main arguments run by the company was that once the tribunal found that the reasons for the dismissal were "personal to the Claimant" (and existed independently of the transfer) it was not open to the tribunal to conclude that the reason or principal reason for the dismissal was the transfer. Its alternative argument was that there was insufficient reasoning to show that the reason for the dismissal was the transfer.
Having regard to the evidence from both Ms Kaur and Mr Windsor considered by the tribunal, the Court of Appeal held that the employment judge "was entitled to believe" Ms Kaur. It referred to the CJEU case of Bork, which makes clear that, even though the proximity of a dismissal to the transfer is not conclusive, "it is often strong evidence in the employee's favour". This was particularly relevant in Ms Kaur's case as she was dismissed on the day of the transfer despite the fact that her relationship with Mr Chatha had been poor for some time without H&W seeking to terminate her employment. The court also criticised the phrase "purely personal reasons" used by Hare Wines Ltd to describe the reason for the dismissal and pointed out that "the law of unfair dismissal or of transfer of undertakings does not recognise such a category".
The court concluded that once it was found that Ms Kaur had not objected to the transfer "the central question became whether (a) she was dismissed because she got on badly with Mr Chatha (who was about to become a director of the business) and the proximity of the transfer was coincidental or (b) she was dismissed because the transferee did not want her on the books, the reason for that being that she got on badly with Mr Chatha". The court held that "which of these options was the sole or principal reason was a question of fact" and the employment tribunal "was entitled to" prefer option (b) over option (a).
The main reasons Hare Wines Ltd lost its case was the lack of consistency in its evidence and a poor paper trail of its discussions with Ms Kaur. This case is therefore a good example of what should be considered by a business anticipating dismissals and a TUPE transfer in order to limit the risk of a successful unfair dismissal claim. Our recommendations include:
Consider whether there is any scope for the dismissed employees to argue that their dismissals are transfer related. If the decision to terminate their contracts is not transfer related, ensure that you stipulate the reasons for terminating their employment clearly.
If the dismissal is transfer related, consider whether it is for an ETO reason and whether it involves changes to the numbers, functions or locations of the workforce.
Follow the appropriate information and consultation procedures and be transparent when discussing the proposed changes with the employees.
Ensure that you create an adequate paper trail confirming your communications with the employees. In particular, request a written copy of any employee's objection to the transfer.
Seek legal advice if in any doubt to limit the risk of claims resulting from the transfer.