Pre-transfer dismissal was by reason of transfer and automatically unfair

Facts of the case

Ms Kaur was employed by a wine and beer wholesale business, H&W Wholesale Ltd (“H&W”). When the business got into financial difficulties, Hare Wines Ltd (“Hare”) agreed to purchase it.

The employment contracts of all H&W’s existing employees, apart from Ms Kaur, were transferred to Hare. Ms Kaur’s employment was terminated shortly before the transfer. She was told by H&W that the reason was the business was ceasing to trade, but Hare contended it was because she had objected to transferring.

Ms Kaur brought proceedings initially claiming redundancy pay and notice, but later amended her claim to include unfair dismissal. She asserted that the principal reason for her dismissal was the transfer of the business, so it was automatically unfair under regulation 7 of TUPE. Hare’s defence was that she had objected to the transfer, with the result that any liability for her dismissal remained with H&W. 

The main issue for the Employment Tribunal (“ET”) to resolve was whether Ms Kaur had objected to transfer. Her case was that her manager did not want her to transfer because they had a strained strained relationship, and hence Hare did not want her to transfer. The ET preferred Ms Kaur’s evidence and concluded the factual dispute in her favour, concluding that she would have transferred but for her dismissal. It followed that the reason for the dismissal was the transfer.      

Hare appealed to the Employment Appeal Tribunal (“EAT”), arguing that the reason for the dismissal was entirely personal to Ms Kaur and did not relate to the transfer. The EAT dismissed the appeal and upheld the ET’s finding that the reason for the dismissal was the transfer.

Court of Appeal’s decision

Hare made a further appeal to the CA, which was also dismissed. The CA said that Hare faced a number of difficulties

• H&W had given a false reason for Ms Kaur’s dismissal. The CA ruled that the ET had been entitled to find on the evidence that she had not objected to the transfer. There could be no appeal from that finding.
• The second difficulty was that the dismissal had occurred on the day of the transfer. The CA observed that the proximity of a dismissal to the transfer is an important consideration when determining the reason for it (P Bork International v Foreningen Af Arbejdsledere I Danmark [1989] IRLR 41).
• The third difficulty for Hare was that the poor relationship between Ms Kaur and her manager had existed for some time without H&W seeking to terminate her employment. The fact that H&W only dismissed her at Hare’s request gave rise to a strong inference that the principle reason for dismissal was the transfer (rather than the relationship).

The CA went on to reject to reject the distinction that Hare sought to draw between: (1) a transferee who refuses to take on any of the workforce (which would amount to dismissal by reason of the transfer; and (2) a transferee who picks out one or two employees to be dismissed for “purely personal reasons”, but takes the rest.

The CA noted that neither unfair dismissal law nor TUPE recognise “personal reasons” as a category. Once it was found that Ms Kaur had not objected to the transfer, the key question was whether she had been dismissed because of her relationship with her manager (with the proximity of the transfer being coincidental), or because Hare did not want her (the reason for that being that she did not get on with manager). The ET had been entitled to prefer the latter to the former in determining the principal reason for the dismissal.

Implications

Dismissals will be treated as automatically unfair if the sole or principal reason for the dismissal is the transfer itself, unless it can be shown that the dismissal is for an economic, technical or organisational reason (“ETO”) entailing changes in the workforce. Cases will inevitably turn on the own specific facts. This case, however, underlines that even where an employer believes it has a non-transfer-related rationale for the dismissal – whether that qualifies as an ETO reason or otherwise – particular caution should be exercised where the dismissal will be occurring close to the transfer date. 

Hare Wines Ltd v Kaur and another – judgment available here