TUPE – objection to the transfer

In London United Busways Ltd v Marchi the Employment Appeal Tribunal dealt with a not uncommon scenario, but one on which the law is not straightforward.  

Under TUPE, employees cannot be forced to transfer their employment, but have limited options if they do not wish to do so:

• They can object to the transfer under Regulation 4(7) and if they do so, their employment contract is deemed to be terminated (but they are not treated as having been dismissed, so they cannot claim a redundancy payment)
• Under Regulation 4(9), where the transfer involves a substantial change in their working conditions to their material detriment, they can treat their employment contract as having been terminated and are treated as dismissed
• If their employer has committed a repudiatory breach of contract, TUPE does not prevent them from resigning and claiming constructive dismissal 

In this case, the Claimant was a bus driver employed by LUB. He did not own a car and his place of work was a 15 minute walk from home. LUB lost the bus route to a different bus firm, Abellio. It was agreed that the Claimant was assigned to this bus route and that he was one of the drivers whose employment would transfer under TUPE to Abellio. He was given three options:

• Transfer to Abellio (which would involve a one hour journey each way to his place of work)
• Object to the transfer and be re-engaged by LUB on different terms (longer hours)
• Resign

The Claimant originally indicated that he objected to the transfer but said that he wished to be made redundant and would not accept employment by LUB on new terms. LUB explained that this was not an option open to him and that if he objected and did not wish to transfer, then his employment would end on the transfer date. After the transfer date, the Claimant maintained that he was still employed by LUB Ltd, sending them his fit notes. LUB refused to acknowledge that he was employed by LUB as he had objected to the transfer. Abellio communicated with the Claimant, but he refused to engage with them. Abellio terminated his employment.

In a Preliminary Hearing, the Tribunal found that LUB had dismissed the Claimant on the transfer date. LUB appealed.

The EAT dismissed the appeal and found that LUB had dismissed the Claimant on the transfer date and that liability for the dismissal therefore lay with LUB.

The EAT concluded that:

• Under Regulation 4(9), where the transfer involves a substantial change in their working conditions to their material detriment, the employee has the option to treat themselves as dismissed, but is not obliged to do so. If they exercise that option, then liability will fall on who the employer was at the time at which the employee exercised their Regulation 4(9) right
• If the employee objects to the transfer under Regulation 4(7) (as was deemed to have happened in this case), but in circumstances where the transfer involves a substantial change in their working conditions to their material detriment, the effect of that objection is that:
  • The employment does not transfer to the transferee
  • The employee is deemed to have been dismissed by the transferor (in this case LUB)

This case highlights the potential complexity of employee objections to TUPE transfer and the allocation of liability where an employee does not wish to transfer due to the changes inherent in the transfer. It is now clear that for an employee to be deemed to be dismissed by the transferor, where there are material changes in working conditions to their material detriment, the employee need not expressly cite those as the reasons for their objection. If, in such circumstances, they do object in any terms, they will be deemed to have been dismissed by the transferor.