Removing a contractual benefit post-transfer

Tabberer v Mears Ltd

The withdrawal by a transferee of a contractual entitlement to a travel allowance was not void under TUPE.

Post-transfer changes to terms and conditions will be void under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) if the sole or principal reason for the change is the transfer (reg. 4(4)).

Background

Mr Tabberer and his colleagues worked as electricians working for a local authority. They were entitled to a travel allowance – this had been paid since 1958 but bore no relation to the way in which they actually worked. In April 2008 their employment TUPE transferred to Mears Ltd who shortly after ceased paying the allowance. Litigation followed to establish whether the allowance was a contractual entitlement – a tribunal and the EAT held that it was. In 2012 Mears decided to vary their contracts unilaterally to cease entitlement to the travel allowance – the rationale being that it was generally recognised that it was outdated and obsolete and made no business sense to continue it. Mr Tabberer and his colleagues challenged this on the basis that the reason or principal reason for it was the transfer and it was therefore void. A tribunal held that the decision to cease the allowance was not connected with the transfer but was rather because Mears believed it to be outdated. Mr Tabberer and his colleagues appealed.

EAT decision

The EAT dismissed their appeal.

It stated that the question to be asked in such cases was – what caused the employer to do what it did? The concern about the outdated nature of the allowance and that it made no commercial sense had been expressed by previous employers of the electricians. This was not an attempt to harmonise terms and conditions but simply a recognition of the unfairness that one group of staff received an outmoded allowance to which others were not entitled. The removal of the allowance was because Mears decided that it was outdated and unjustified. Although Mears had found out about the payment of the allowance at the time of the transfer, that had simply been the context in which it had made its decision; it had not been the reason for it.

Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2018/0064_17_0502.html

Comment

This is a rare and useful example of changes to terms and conditions made post-transfer not being void. The question an employer who is considering making changes in such a situation must ask themselves (and have a paper trail showing their reasoning) is what is the actual reason for the change? Is it a justifiable business reason or is it because they wish to harmonise employment terms? Similarly, the question a tribunal must ask is simply: why did the transferee act in the way it did? Here it was plain that the underlying reason for the change was one which could have applied regardless of the transfer.