One of the trickiest aspects of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) for employers to deal with is how to handle terms and conditions of employment. An employee transfers into the business from another organisation with the terms and conditions relating to that previous employment intact. The new employer’s hands are tied. The law prevents the new employer from changing or removing those legacy terms and conditions unless certain circumstances apply.

The risk for any employer who dares to change terms and conditions following a TUPE transfer is that the change will be considered to be connected to the transfer, and therefore void. There is an exception if the employer can show that the contractual change was for a reason totally unconnected to the transfer. This what the employer in Tabberer v Mears Ltd sought to do.

Background

The claimants in the case were electricians originally employed by Birmingham City Council, but whose employment had transferred under TUPE from one employer to another a number of times. Their employment transferred to Mears on 1 April 2008.

The electricians’ employment contract provided for the payment of an electricians travel time allowance (ETTA). The ETTA had been introduced in 1958 at a time when electricians employed by the Council travelled between several depots when performing their duties. However, by the time relevant to the claim, only one depot remained.

Mears viewed the ETTA as outmoded and unjustified, and decided not to pay it any longer. The affected electricians disputed this. Litigation then ensued under the title of Salt and others v Mears Ltd. The outcome of that litigation was to find that the claimants in Salt had a contractual entitlement to ETTA despite the courts finding the allowance was “outmoded” and “prehistoric with no resemblance to modern times”. Following the conclusion of the Salt litigation, Mears decided to remove the entitlement to the ETTA with effect from 1 September 2012.

The claim

The electricians responded by bringing claims for unauthorised deductions of wages arguing that the contractual variation made in 2012 was void because it was connected with a TUPE transfer. The Employment Tribunal disagreed with the electricians and dismissed their claims. The electricians appealed and the matter proceeded to the Employment Appeal Tribunal (EAT).

The appeal

The key question for the EAT was, what was the reason for Mears’ decision to end the ETTA? What caused Mears to do what it did?

The EAT concluded that the reason, or principal reason, for Mears’ decision to end the ETTA was its belief that the entitlement was outdated. Crucial to this decision was the EAT’s finding that the Salt litigation was merely the backdrop to Mears’ decision to end the ETTA, not the reason for the decision. The EAT found that the Salt litigation merely confirmed that the ETTA was outmoded, but it did not create a connection between the decision to end the ETTA and the TUPE transfer.

“The operative reasoning – the belief that the payment was outdated and unjustified – did not arise purely on the occasion of, let alone because of, the transfer; it was a pre-existing belief or state of affairs.” Employment Appeal Tribunal

Comment

This decision gives comfort to employers that there may be circumstances in which employment contracts can be varied post-transfer without infringing TUPE. The ability to point to a pre-existing problem or set of circumstances outside of a TUPE transfer can support an argument that a particular contractual change is unconnected to the transfer. It was fortunate that Mears could demonstrate a history in which the electricians’ previous employers had considered the allowance’s irrelevance and how best to end this outdated entitlement.

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