Chris Burgess gets legal guidance this week from Martin Brewer, a Partner with the employment team of Mills & Reeve and Helen Badger, employment law expert at Browne Jacobson on whether TUPE rules apply where employees have less then a year’s employment service with the same employer.
The question:
We are a small company of 16 employees who have bought another company of three employees based about 75 miles away. All three have less than 12 months service. We shall be closing their office and managing the business from our existing offices. We plan to make the three redundant.
Does TUPE apply here or can we justify dismissal on an economic reason that is it is not cost effective to move them 75 miles. Also does the fact that they have less than 12 months service also allow us to dismiss?
The answers:
Martin Brewer, is a Partner with the employment team of Mills & Reeve
Chris, your question has a number of elements. First you say you have 'bought' another company. If you have bought only the shares then this is not a TUPE (Transfer of Undertaking Protection of Employment regulations) transfer. If, however, you have bought the business but not the shares then TUPE will apply.
Secondly, you will have taken a transfer of the employees if they are assigned to the business. In this context 'assigned' means that they spend the whole of their time working in the business you have bought. Thirdly, and for you the key issue, is what happens next.
If you plan to relocate the work to your main location then the three employees you refer to are in a redundancy situation. Therefore, you will need to follow a proper process, including the statutory minimum dismissal process incorporating fair selection and a search for alternative employment.
Having said that, commercially if they have less than 11 months and three weeks service they will not have access to an unfair dismissal claim unless the claim falls into one of the exempted categories where 12 months service is not required. It's 11 months and three weeks because under the legislation the employee can add the statutory minimum notice period (one week if service is less than two years) on to their service in order to get over the 12 months continuous service needed to claim unfair dismissal. You should of course bear in mind the potential for a discrimination claim where no service is required of course.
You ask about the ETO reason. An ETO reason must be an economic, technical or organisational reason which 'entails a change in the workforce'. This has been taken to mean a change in the number or composition of the workforce. It may be an academic point if these three employees don't have the requisite service to bring unfair dismissal claims, but it is arguable that a dismissal because of a refusal/inability to relocate cannot amount to an ETO reason.
The reason for this is that you do not have a diminished requirement for workers (no change in the numbers employed), and you don't appear to be changing the composition of the workforce – you are merely relocating them. As far as I'm aware this is an untested point but caution is needed in these circumstances because, in the absence of a valid ETO reason for dismissal, any dismissal will be by reason of the transfer and automatically unfair. As I say this may not impact on you if their service is less than 11 months and three weeks anyway.
Martin can be contacted at: [email protected]
