The Court of Appeal has confirmed in Hare Wines Ltd v Kaur that where existing concerns about an employee’s working relationships meant that the purchaser of the business in which she worked was reluctant to take her on, the sole or principal reason for her dismissal was the TUPE transfer and the dismissal was therefore automatically unfair.
Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”), a dismissal will be automatically unfair if the sole or principal reason for that dismissal was the TUPE transfer (and there is no economic, technical or organisational reason for the dismissal).
Ms Kaur, worked for a business which was sold to Hare Wines Limited (“Hare Wines”). She was dismissed on the date of the transfer. Hare Wines sought to argue that her dismissal was because she had a bad working relationship with one of her colleagues who was also due to transfer and would become one of the directors of Hare Wines. Accordingly, they said, the sole or principal reason for her dismissal was not the transfer and it was therefore not automatically unfair.
The Court of Appeal disagreed. It pointed out that the problems Hare Wines sought to rely on had existed for some time without any action being taken. On this basis, and given the proximity of her dismissal to the transfer, it was possible to conclude (as the Employment Tribunal had done) that the true reason for Ms Kaur’s dismissal was Hare Wine’s reluctance to take on an employee who had a bad working relationship with a colleague. Absent the transfer it was likely that Ms Kaur would not have been dismissed when she was. The transfer was therefore (at the very least) a principal reason for her dismissal and her dismissal was automatically unfair.
This case highlights the need for caution when dismissing employees close to the time of a TUPE transfer. Although it does not say that proximity to a transfer will, of itself, render a dismissal automatically unfair, it does make it clear that this is an important factor that will be taken into account, as all circumstances will be considered in determining the reason for a dismissal.
In the event that it is necessary to make dismissals in close proximity to a TUPE transfer, employers should think very carefully about why the employee is being dismissed and why it is necessary to dismiss them at that point before proceeding. Purchasers should also carry out careful due diligence on any dismissals effected by the seller pre-transfer and consider what protection they should ask for in the sale agreement, as liability for any TUPE-related dismissals could pass to them.