TUPE Dismissals: When They're Automatically Unfair

TUPE provides strong protection against dismissal. Understanding when dismissal is automatically unfair and when it might be fair is crucial for both employers and employees.

The Basic Rule

Cannot Dismiss for Transfer

Dismissal is automatically unfair if:

• Sole or principal reason is the transfer itself
• Or reason is connected to the transfer
• Unless there's an ETO reason

Applies Before and After

Protection applies to dismissals:

• Before transfer (by old employer)
• At time of transfer
• After transfer (by new employer)

Timing close to transfer creates strong inference of connection.

Automatically Unfair Dismissal

When Dismissal is Automatically Unfair

If dismissed because:

Reason	Automatically Unfair?
Transfer is happening	Yes
To make business more attractive to buyer	Yes
Because new employer wants fewer staff	Yes
To cut costs before transfer	Yes
Terms don't suit new employer	Yes
New employer prefers their own staff	Yes

No Qualifying Service

For TUPE dismissals:

• Don't need 2 years' service
• Protection from day one
• Applies to all employees
• No cap on compensatory award

Burden of Proof

If dismissed close to transfer:

• Tribunal will infer connection
• Burden on employer to prove otherwise
• Must show genuinely unconnected reason
• Or valid ETO reason

ETO Reasons

What is ETO?

Economic, Technical or Organisational reason entailing changes in the workforce

Three categories:

• Economic - financial reasons requiring workforce changes
• Technical - changes to equipment/processes requiring workforce changes
• Organisational - structural changes requiring workforce changes

Critical Requirement

Must entail changes in the workforce:

• Changes to numbers of employees, OR
• Changes to functions of employees
• Actual job changes required
• Not just cost-cutting alone

Examples of Valid ETO

Scenario	Why ETO?
Merge two sites, genuine redundancy	Organisational reason, workforce reduction
New technology needs different skills	Technical reason, function changes
Financial difficulties require smaller workforce	Economic reason if genuine workforce changes

NOT ETO

These don't qualify:

• Simply cutting costs without workforce changes
• Harmonizing terms and conditions
• Transfer itself
• Making business more saleable
• New employer preference for fewer staff (without genuine business reason)

When Dismissal May Be Fair

Requirements for Fair Dismissal

Even with ETO reason, dismissal must be:

1. Genuine ETO reason - real, not invented
2. Entails workforce changes - actual job changes
3. Fair process - consultation, warnings, etc.
4. Reasonable decision - proportionate
5. Within band - reasonable employer could dismiss

Genuine Redundancy

If genuine redundancy situation:

• Jobs actually disappearing
• Overlap of roles after merger
• Work requirements genuinely reduced
• Fair selection process
• Proper consultation

May be fair dismissal with ETO reason.

Other Fair Reasons

Can still be fairly dismissed for:

• Gross misconduct - unconnected to transfer
• Capability - performance issues predating transfer
• Some other substantial reason - if genuinely unconnected

Must prove completely separate from transfer.

Timing and Connection

Dismissal Close to Transfer

Very suspicious if:

• Days or weeks before transfer
• During transfer negotiations
• Immediately after transfer
• Before consulting about transfer

Creates inference of connection.

Dismissal Later

After months or years:

• Connection weaker
• But can still be connected
• Evidence of link needed
• Timing not conclusive

Proving No Connection

Employer must show:

• Decision made independently
• Documented before transfer discussion
• Would have happened anyway
• Completely separate reason
• Process predates transfer knowledge

Process Requirements

Even With ETO

Fair process still required:

• Proper investigation (if misconduct/capability)
• Consultation (if redundancy)
• Fair selection (if redundancy pool)
• Consider alternatives
• Right to appeal
• Following ACAS Code

Information and Consultation

If dismissals envisaged:

• Must inform employee representatives
• Consult about measures
• Consider avoiding dismissals
• Protective award risk if not

Redundancy and TUPE

Can Be Made Redundant

TUPE doesn't prevent genuine redundancy:

• If roles genuinely redundant
• Fair selection process
• Proper consultation
• ETO reason exists
• Redundancy pay due

Pre-Transfer Redundancies

If made redundant before transfer:

• Must be genuine redundancy
• Cannot be to avoid TUPE
• Process must be fair
• Connection to transfer scrutinized

Post-Transfer Redundancies

After transfer occurs:

• Must be genuine business need
• ETO reason required if connected
• Fair process essential
• Cannot be disguised TUPE dismissal

Constructive Dismissal

Substantial Change

If employer substantially changes working conditions:

• Employee may resign
• Claim constructive dismissal
• Connected to transfer
• Automatically unfair

Material Detriment

Changes must cause material detriment:

• Significant worsening
• Fundamental breach
• Makes position untenable
• Connected to transfer

Compensation

If Automatically Unfair

Can claim:

• Basic award - if 2+ years' service (1.5 weeks' pay per year for last 6 years, max £700/week)
• Compensatory award - loss of earnings, uncapped for TUPE
• Future loss - until finding new job
• Pension loss - loss of pension contributions

No Cap

Unlike ordinary unfair dismissal:

• Compensatory award uncapped for automatically unfair TUPE dismissals
• Can be substantial
• Reflects seriousness

Mitigation

Must mitigate losses:

• Seek alternative employment
• Accept reasonable offers
• Cannot sit back
• Losses reduced if don't try

Challenging Dismissal

Grounds to Challenge

Argue dismissal was:

• Connected to transfer (automatically unfair)
• No valid ETO reason
• ETO claimed doesn't entail workforce changes
• Process unfair
• Selection unfair
• Real reason was transfer

Evidence Needed

Gather:

• Timeline of transfer and dismissal
• Communications showing connection
• Business reasons claimed
• Process followed (or not)
• Treatment of others
• Offers or discussions about transfer

Time Limits

• 3 months less 1 day from dismissal
• ACAS early conciliation required
• Don't delay

Practical Scenarios

Scenario 1: Dismissed Week Before Transfer

Made redundant one week before transfer to reduce headcount for new employer.

• Connected to transfer
• No ETO (cost-cutting not workforce change)
• Automatically unfair
• High compensation

Scenario 2: Post-Transfer Genuine Redundancy

Three months after transfer, genuine merger of two departments, redundancy with fair process.

• May have ETO reason
• If genuine restructure
• Fair process key
• Could be fair

Scenario 3: "Gross Misconduct" During Transfer

Accused of misconduct that seems fabricated, dismissed during transfer negotiations.

• Suspicious timing
• Burden on employer to prove genuine
• Check if misconduct real or pretext
• May be automatically unfair

Employer Risks

High Cost of Getting Wrong

TUPE dismissals are expensive:

• Automatic unfair dismissal
• Uncapped compensation
• Multiple employees affected
• Reputational damage
• Tribunal scrutiny

Cannot Avoid Transfer

Even if dismiss all staff:

• Transfer may still apply
• Dismissals automatically unfair
• Still liable for compensation
• Transfer could be void

Summary

Core Protection

• Cannot dismiss for transfer itself
• Automatically unfair if connected
• No service requirement
• Uncapped compensation

ETO Exception

Dismissal may be fair if:

• Genuine economic, technical or organisational reason
• Entails changes in workforce
• Fair process followed
• Reasonable decision

Key Requirements

For ETO to work:

• Must entail workforce changes
• Genuine business reason
• Fair selection and process
• Alternatives considered
• Properly documented

Compensation

If automatically unfair:

• Basic award (if eligible)
• Compensatory award (uncapped)
• Loss of earnings
• Future loss
• Can be substantial

For Employees

• Strong protection during transfers
• Challenge dismissals near transfer
• Document everything
• Seek advice promptly
• Know time limits

For Employers

• TUPE dismissals very risky
• Need genuine ETO reason
• Process must be exemplary
• Document business case
• Get legal advice
• Expect tribunal scrutiny

TUPE dismissal protection is robust. Employers contemplating dismissals around transfers face significant legal and financial risk without genuine ETO reasons and fair process.