Published May 2012

Material Detriment
Regulation 4(9) of TUPE provides that “where a relevant transfer involves or would involve a substantial change in working conditions to the material detriment of a person whose contract of employment is or would be transferred”, the employee may treat their contract as having been terminated by the employer. In such cases, the employee will be able to claim that they have been dismissed for an automatically unfair reason.

The issue in such cases is firstly whether there has been a substantial change in working conditions and, secondly, whether this constitutes a material detriment. In a previous case, Tapere v South London and Maudsley NHS Trust, it was held that whether there has been a substantial change in working conditions is a question of fact to be determined by reference to the nature (or character), as well as the degree, of change.

When considering whether the change was to the employee’s material detriment, the EAT said that a Tribunal must consider the impact of the proposed change from the employee’s point of view and, if the employee considered the change to be detrimental, whether that was a reasonable view for the employee to take. The EAT also said that a detriment is material if it is more than trivial or fanciful. In Ms Tapere’s case the change of workplace meant potential disruption to child care arrangements and a longer or altered journey which she did not wish to undertake.

Abellio London Ltd v Muse
This recent case has now further entrenched the precedent in Tapere. In Abellio, the EAT held that a six mile move was substantial as it involved a move from north to south of the river Thames and so an increase on the
working day for the Claimant (who was a bus driver) of between one and two hours.

The EAT held that, from the employee’s point of view, the proposed change was to his material detriment, and that this was a reasonable position to adopt. Tapere and Abellio cause difficulties for transferees because they establish that a material detriment is to be considered from the employee’s perspective. This means that when a change of location accompanies a TUPE transfer, even if only a small distance, transferees will have to bear an increased risk of automatic unfair dismissal claims. This is an issue which transferees should be alive to and seek to manage on a commercial or individual basis well in advance of the transfer taking place.

Harmonisation of Terms of Employment

The 2006 TUPE Regulations state that any variation of contractual terms for employees who have been, or will be, subject of a TUPE transfer is void if the sole or principal reason for the variation is the transfer itself, or a reason connected with the transfer (which is not an ETO entailing changes in the workforce).

Previously, in London Metropolitan University v Sackur, the EAT confirmed that the decision to harmonise a transferred employee’s (more generous) terms and conditions with those of existing employees following a TUPE transfer cannot be a valid ETO, as such a variation would be by reason of the transfer itself.

Smith v Trustees of Brooklands College
However, in this recent case the EAT decided that a consensual variation of contractual rates of pay, following a TUPE transfer of employment, was not void. The Claimants had worked on a part-time basis, but their salary had been calculated on a full time basis (a difference of upto 14 additional hours). The Trustees argued that this calculation was a “mistake”, and did not reflect national practice or the Claimants’ trade union pay guidance. The variation was therefore not by reason of the transfer or for a reason connected with the transfer. The EAT accepted this argument, and rejected the Claimants’ claim that the change would not have happened “but for” the transfer.

This is a potentially helpful case for employers. It seems that occasionally common sense will prevail!

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