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Change to terms post TUPE not always unlawful

If the reason for the change is not solely or mainly the TUPE itself…

Conventional wisdom has it that any change to an employee’s benefits post TUPE is likely to be unfair, but providing the employer can show that the change was not solely or mainly because of the transfer itself, changes to an employee’s detriment are sometimes possible.

Mr Tabberer and his colleagues were electricians who ended up, via a series of transfers, with Mears Ltd. Their terms included an Electrician’s Travel Time Allowance (ETTA) which was a special allowance designed to compensate them for loss of another bonus (a productivity bonus) during the time they were travelling from site to site.

Mears Ltd HR team were of the view that this was an outdated and unnecessary allowance as working practices had evolved to an extent where the ETTA was not required. They gave notice to the engineers that the ETTA would no longer be paid and Mr Tabberer and some of his colleagues brought an employment claim in a tribunal.

Previously Mears and other employers (the employees had undergone a number of TUPE transfers) had been of the view that it would be illegal to stop paying the allowance because of the belief that TUPE protected it.

In this case the tribunal and the Employment Appeal Tribunal (EAT) found that the reason for Mears Ltd stopping the ETTA was not because it was trying to harmonise terms and conditions (which would be unlawful post TUPE) but because the allowance was outdated and unjustified and it was unfair too – the electricians were advantaged to receive it over other groups who did not.

Accordingly the EAT ruled that there was no breach of TUPE and that Mears Ltd were right to serve notice on the ETTA.

TUPE is complex legislation, it normally applies when all or part of an organisation transfers from one employer to another or when a service contract transfers from one provider to another.  The legislation protects the terms and conditions of the transferring employees as well as their employment and while some changes to terms (and indeed numbers of jobs) can be achieved, the reasons are limited and must be due to an ‘Economic, Technical or Organisational’ (ETO) reason as defined in TUPE legislation.  This means that changing terms because, for example, the acquiring employer’s employees are paid less would not be lawful because this would not fit into an ETO definition and because the change would not have been contemplated had the transfer not occurred….and therefore the reason for the proposed change is (solely or mainly) the transfer itself.

In the Mears case the tribunal and the EAT were satisfied that the reason for the removal of the allowance was not solely or mainly due to the transfer, but for other permissible reasons.

The passage of time will weaken the influence of TUPE, but great care still needs to be taken and while managers often express concern over having employees with different terms and conditions, if this has arisen because some employees were inherited via a TUPE transfer, the differential will need to be maintained.

As ever in employment law changes made that are contrary to TUPE legislation are only a problem if the employees concerned challenge them and some businesses will take a risk management approach to, for example, the harmonisation of terms. If choosing to do so we should never forget that the risk will continue to exist potentially for years. Even if new terms are agreed by the employees, if a tribunal later finds that the new terms were to their detriment the change will still be regarded as unlawful.

myHRdept can advise employers on TUPE related terms changes and can assist employers with the TUPE process itself (inbound or outbound.)

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