Variations in Terms and Conditions Following the Transfer of an UndertakingPosted in : TUPE Updates on 26 April 2021
In this Bulletin we examine Lewis v Dow Silicones, which demonstrates that when an employee feels badly treated and resigns, claiming unfair dismissal, but fails because he has not shown a fundamental breach of contract on the part of the employer, he has another trick up his sleeve under TUPE. He may rely on regulation 4(9) of TUPE which provides: “… where a relevant transfer involves or would involve a substantial change in working conditions to the material detriment of a person whose contract of employment is or would be transferred under paragraph (1), such an employee may treat the contract of employment as having been terminated, and the employee shall be treated for any purpose as having been dismissed by the employer.”
The case was remitted to the UK ET to consider this possibility. In Mitie Property Services UK limited v Bennett UKEATS/0023/19/SS the UKEAT shows deference to the controversial CJEU decision in ISS v Sonia Govaerts, Case C-344/18, (which suggests that on a transfer with multiple transferees and employees when work across all parts transferred they may transfer to all new (multiple) transferees, depending on the proportion of time worked with the old employer). The interesting legal point is that ISS was based on the Acquired Rights Directive (ARD) and in principle applies to Reg 3(1)(b) transfers. Does it inevitably apply to a Reg 3(1)b) SPC transfer, a creature of UK law only? Consistency however would suggest that both Reg 3 (1(a) and Reg 3 (1)a) are construed in the same way.
The scope of Regulation 4(9) of TUPE
In Lewis v Dow Silicones UKEAT/0155/20/LA (V) Mr Lewis resigned after a TUPE transfer and claimed unfair dismissal relying on alleged fundamental breaches of contract by his employer and/or of regulation 4(9) of TUPE (“substantial change(s) in working conditions to [his] material detriment”) arising from the introduction of new duties. The ET rejected his claim that he was to be treated as dismissed on either basis, finding (a) that under his existing contract, the employer was entitled to introduce the changes and (b) that the changes were not in breach of reg 4(9).
On appeal the EAT held: (a) that the ET’s finding that under the claimant’s existing contractual terms the employer was entitled to introduce the changes was open to it; but (b) that that finding was irrelevant to the issue under regulation 4(9); and the finding that the changes were not substantial and to the claimant’s material detriment were perverse on a proper application of regulation 4(9), (which can apply even where there is no breach of the employee’s contract of employment - see Tapere v South London and Maudsley NHS Trust  IRLR 972). The Appeal was therefore allowed and the issue of unfair dismissal (on (the reg 4(9) point) remitted to the ET.
HHHJ Shanks usefully summarised some points of interpretation from the case law:
“Regulation 4(9) was considered by the Employment Appeal Tribunal in the case of Tapere v South London and Maudsley NHS Trust  IRLR 972; the following propositions from that case are not contentious:
(1) The regulation can apply even where there is no breach of the employee’s contract of employment;
(2) Whether there is a change in working conditions and whether it is substantial are questions of fact;
(3) The nature as well as the degree of any change needs to be considered in deciding whether it is substantial; and the nature (or “character”) of the change is likely to be the most important aspect in determining this;
(4) The question whether a change in working conditions is to the “material detriment” of an employee involves two questions: (a) whether the employee subjectively regarded the change as detrimental and, if so, (b) whether that was a reasonable position for the employee to adopt”
The approach to applying ISS Facility Services NV in the UK via EU Retained Law
In Mitie Property Services UK limited v Bennett UKEATS/0023/19/SS the EAT shows deference to the controversial CJEU decision in ISS v Sonia Govaerts, Case C-344/18, (which suggests that on a transfer with multiple transferees and employees who work across all parts transferred, they may transfer to all new (multiple) transferees, depending on the proportion of time worked with the he old employer). The facts of the case are complex, and we concentrate hereon the ISS point.
A local authority ("N”) re-tendered the work for replacement of kitchens within its social housing stock. All work under the previous contract had been carried out by a single contractor (“A”). A group of A’s employees had worked exclusively on the contract between N and A. When the work was re-tendered, it was split by N on geographical lines into two separate contracts awarded to two new contractors. Between the date of the ET Judgment and the appeal, the CJEU issued its decision in ISS. The UK EAT concluded that the ET Tribunal had correctly regarded itself as being bound at the time of its Judgment by UK case law (which would not have sent employees off to multiple employers as per ISS). The case was remitted to consider the application of the decision in ISS was based on the ARD and in principle applies to Reg 3(1)(b) transfers. Does it inevitably apply to a Reg 3(1)b) SPC transfer, a creature of UK law only? Consistency however would suggest that both Reg 3 (1(a) and Reg 3 (1)b) are construed in the same way.
Thus: “In summary, therefore, I have concluded that Govaerts can and should apply when considering the effect, under Regulation 4 of TUPE, of a relevant transfer that is a service provision change in terms of Regulation 3(1)(b). There is no reason in principle why an employee may not, following such a transfer, hold two or more contracts of employment with different employers at the same time, provided that the work attributable to each contract is clearly separate from the work on the other(s) and is identifiable as such. The division, on geographical lines, of work previously carried out under a single contract into two new contracts is, in principle, a situation where there could properly be found to be different employers on different jobs” (per Lord Fairley).
More on Transfer of Undertakings (TUPE)
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