Employment Law Cases
TUPE and a substantial change in working conditions
Lewis v Dow Silicones UK Ltd
A contractual right to vary contractual terms does not prevent a dismissal claim under TUPE.
Under TUPE, reg. 4(9), if a relevant transfer results in a substantial change in working conditions that is to the transferring employee’s material detriment, they have the right to treat themselves as having been dismissed and may bring a claim for automatically unfair dismissal. This case looked at how this provision is affected if an employee’s contract contains a flexibility clause entitling the employer to make certain variations to the employee’s terms and conditions.
Mr Lewis worked as an operations technician at a power plant. His employment was subject to a collective agreement which provided that management would determine ‘work patterns by reference to operational requirements’ and that employees would be ‘expected to undertake duties and responsibilities commensurate with their grade and competency’. Initially he was employed by Npower but when Dow Silicones bought the plant, he and the other staff were outsourced to Engie Renewals, who became Mr Lewis’ employer. In 2017, Dow decided to ‘insource’ the staff; this involved them transferring from Engie to Dow – a transfer under TUPE. Dow intended to make changes to the working arrangements on two fronts:
- introducing a fixed number of hours whereby employees would be on standby/call and would receive a premium of £9,000 in return. This differed from the practice prior to the TUPE transfer where Mr Lewis regularly carried out voluntary overtime and received a shift and unsociable hours’ allowance to the sum of £10,345, and
- adjusting the responsibilities of operations technicians in relation to safety. Under the existing routine, operation technicians were not responsible for issuing work control documents for faulty machinery. Instead, the new proposal would see operations technicians, which included Mr Lewis, issuing ‘Safe Work Permits’ whereby they would undergo compulsory training over a period of six months
Mr Lewis was not happy with these changes and he resigned, claiming unfair dismissal. He argued that the transfer would involve substantial changes to his material detriment for the purposes of reg. 4(9), that the proposed changes were a fundamental breach of contract and resigned claiming constructive dismissal.
The tribunal held that the new working arrangements did not involve a substantial change to Mr Lewis’ working conditions to his material detriment because under his existing contract the employer was entitled to introduce the changes and the changes were not substantial changes in working conditions to his material detriment. Mr Lewis appealed.
Mr Lewis lost on the constructive dismissal point (the changes weren’t a breach of contract because they could be made within the express terms of his contract) - but he won on question of whether this was automatically unfair under the TUPE legislation.
The EAT restated principles derived from case law regarding the operation of TUPE, reg. 4(9):
- It can apply even where there is no breach of the employee’s contract of employment.
- Whether there is a change in working conditions and whether it is substantial are questions of fact.
- The nature as well as the degree of any change needs to be considered in deciding whether it is substantial; and the nature of the change is likely to be the most important aspect in determining this.
- The question whether a change in working conditions is to the ‘material detriment’ of an employee involves two questions: does the employee subjectively regard the change as detrimental and, if so, was that a reasonable position for the employee to adopt?
The EAT drew a distinction between Mr Lewis doing a significant amount of overtime voluntarily and having fixed compulsory standby/on call hours. On the facts, he had subjectively considered the change detrimental to him and the EAT deemed his view reasonable on the basis of the compulsory nature of the new arrangement which could impact his domestic plans and arrangements. As regards the safety adjustments, the EAT concluded that this too amounted to a substantial change, irrespective of whether it was within Mr Lewis’ capabilities following some training. The nature of the new responsibilities and the significance of six months’ training was objectively reasonable for Mr Lewis to regard as detrimental.
Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2021/0155_20_0404.html
This is a useful reminder that the employee’s ability to claim automatic unfair dismissal under TUPE is entirely separate from the contractual right to make changes to the employee’s contract and must be viewed subjectively, initially namely did this employee regard this as a substantial change?