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TUPE: ETO reasons for dismissal must be pleaded and evidenced where changes are made to an employee's material detriment after a TUPE transfer

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By Ceri Fuller, Hilary Larter, & Joanne Bell


Published 16 May 2024


In this case the EAT allowed a second appeal by a former employee as the ETO reason found by the tribunal was not pleaded or evidenced.


The Facts

The claimant, Gary Lewis, worked as an operations technician at a Combined Heat and Power Plant which was purchased by Dow Silicones in 2013 and insourced in 2017. This was a service provision change under TUPE. As a result of the insourcing, the employer sought to introduce changes to the working conditions, such as shift patterns, overtime rates, and standby arrangements. Mr Lewis resigned and claimed constructive dismissal arguing that these changes constituted a substantial change in working conditions to his material detriment and were contrary to regulation 4(9) of TUPE.

The claim was dismissed by the employment tribunal, which found that the employer was entitled to introduce the changes as they were not to his material detriment so regulation 4(9) of TUPE did not apply. The claimant appealed and the EAT upheld his appeal, finding that the tribunal's decision was perverse and that the changes were to Mr Lewis' material detriment. The case was remitted to a second tribunal to determine if the dismissal was automatically unfair under TUPE. At the remitted tribunal Mr Lewis' claim was dismissed again, finding that the transfer was not the sole or principal reason for the changes but it was to address pre-existing problems with health and safety which was an economic, technical, or organisational (ETO) reason entailing changes in the workforce. The second tribunal therefore found his dismissal was fair.

Mr Lewis appealed to the EAT again, arguing that the second tribunal erred in law by allowing the employer to advance a new reason for dismissal that was not argued at the original tribunal hearing and by concluding that the ETO defence was made out. The EAT agreed. It noted that where a TUPE transfer involves a change in working conditions to the material detriment of a claimant and the transfer is the occasion for the change, it is hard to see how it could be held that the claimant has not at least set up a sufficient basis for a claim that the transfer was the reason or principal reason for the change in working conditions. It was for the respondent to establish the reason for dismissal. If they do not prove a reason that was not the transfer, the tribunal can decide that the sole or principal reason for the dismissal is one that was not advanced by either party, but there must be evidence to do so. The EAT went on to find that the employer failed to prove the reason for the dismissal and substituted a decision that the dismissal was automatically unfair following a TUPE transfer. It remitted the matter to a new employment tribunal to determine remedy.


What it means for employers

The case underscores the need for consultation and clear communication with employees when operational changes occur following a service provision change. Employers should be cautious about introducing changes that could lead to claims of material detriment by employees, as they may result in successful claims of automatic unfair dismissal. This case highlights that if there is an ETO reason for the dismissal this should be clearly pleaded at the outset and evidenced as the burden is on the employer to prove the transfer is not the sole or principal reason for the dismissal. Had the employer set this out in their defence it may have avoided two trips to the EAT.

Lewis v Dow Silicones UK Ltd