The Employment Appeal Tribunal has confirmed that it will be unlawful to dismiss an employee simply to make a business more attractive for a purchaser, even when no purchaser has been identified.
In this case, Spaceright Europe Ltd had dismissed its Managing Director because they thought he would be too expensive for a purchaser of the business. This rendered the dismissal automatically unfair under the Transfer of Undertakings (Protection of Employment) Regulations (the dreaded TUPE Regulations).
Spaceright would have been off the hook if they had been able to persuade the court that there was an economic, technical, or organisational (ETO) reason for the dismissal which entailed changes in the workforce. Unfortunately, they could not. The Court held that there was a continuing need for the Managing Director’s role.
As TUPE does not apply to purchases of businesses through their shares, it may also have been a defence (under TUPE at least) to say that they were proposing a sale of the shares, rather than the assets of the business.