TUPE Loophole

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Carolyne Wahlen
GapHR Ltd


When you sell your company, the employment law relating to TUPE applies. But what we discovered is a well-kept secret. There is a way to dismiss (some) employees due to TUPE, and still avoid a tribunal claim!

It is very well known that you can’t dismiss an employee on the grounds of a TUPE transfer. It counts as automatic unfair dismissal. And this is the viewpoint that all the lawyers (bar one) I have spoken to live by.

There are ways to dismiss. These are the Economic, Technical or Organisational (ETO) reasons. It is very tricky to ensure that the dismissal qualifies. The reasons have to be relating to

  • profitability or market performance (Economic)
  • a change to nature of equipment or production processes (Technical)
  • management or organisational structure (Organisational)

And in addition, the ETO reason must entail changes in the workforce. These “changes” are very narrowly interpreted by the courts.

However, discussing a recent TUPE transfer and regarding dismissing staff, the lawyer used the phrase “automatic unfair dismissal if they meet the qualifying criteria”. Immediately I pounced – what qualifying criteria?

Well it turns out that it is automatic unfair dismissal. However this only applies if you have protection from unfair dismissal because you have more than two years’ service. If you don’t have two years’ service, then you have no protection from unfair dismissal. This is different from, for example, dismissal on the grounds of pregnancy, which is automatic unfair dismissal from day one.

So if you are thinking of parting company with employees before, or after, a TUPE transfer, then you don’t always have to use the ETO reasons to achieve that aim.

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