Could two employees whose benefits were reduced after a business transfer force the employer to give them their old terms back?
Yes, says the Court of Appeal in Hazel v. The Manchester College.
The College cut the wages of over 1,500 employees who had transferred to them when it took over a teaching contract at HMP Elmley. The College said that they had made the cut because, without it, redundancies would be necessary, and because it brought them into line with other employee’s terms.
The College achieved the pay cut by first asking the claimants to agree to the new terms. When they refused, the college dismissed the employees but offered them new jobs on the reduced terms, which they accepted and returned to work. They brought claims for unfair dismissal, and asked the Tribunal to order reinstatement of their old terms.
The legal issue
Because the employees were dismissed for refusing to sign the new terms, and the imposition of them was connected with the transfer of the teaching contract, the dismissals were, on the face of it, automatically unfair under TUPE.
In these circumstances, employers have a defence when there is what is known as an ETO reason. This is where there is a business reason which entails changes in the workforce. But the Court of Appeal found that because the individuals in question were not made redundant, there had been no ‘changes in the workforce’, and the College was not able to use the defence.
Where there has been an unfair dismissal, Tribunals are able to order reinstatement on an employee’s original terms, and that is what they did in this case.
Implications for businesses
This case is a good warning against harmonisation of terms following either the purchase of a business or taking over a contract. The employees in question used a novel approach to getting their old terms back, which is sure to become more commonplace.
If you have an issue like this, we are experts in the field, and would be delighted to discuss it with you.