Although a dismissal under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) can be fair for economic, technical or organisational reasons, the Court of Appeal held in Hare Wines Ltd v Kaur and anor that there is no category in law whereby it is fair to dismiss an employee for personal reasons relating to a transfer.
Basic facts
Ms Kaur was employed as a cashier in a wine wholesale business, H & W Wholesale Ltd (H&W), which had two directors – Mr Hare and Mr Windsor.
In December 2014, H&W ceased trading for financial reasons and was taken over by Hare Wines Ltd. One of the directors of the new entity, Mr Chatha, was a previous colleague of Ms Kaur’s, with whom she had a strained working relationship.
On 9 December, following meetings with the employees of H&W, Mr Windsor wrote to Ms Kaur terminating her employment. She subsequently submitted a claim for automatic unfair dismissal following a TUPE transfer, among other things.
The company resisted her claim on the basis that she had objected to the transfer. As a result, her contract did not transfer over to the new entity (unlike all the other employees) and she should not be treated as having been dismissed.
Relevant law
Regulation 7(1) of TUPE states that: “Where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of part 10 of the 1996 Act (unfair dismissal) as unfairly dismissed if the sole or principal reason for his [sic] dismissal is the transfer”.
Regulation 7(2) states that “This paragraph applies where the sole or principal reason for the dismissal is an economic, technical or organisational reason entailing changes in the workforce of either the transferor or the transferee before or after the relevant transfer”.
Tribunal and EAT decisions
The tribunal, however, held that she had not objected to being transferred over to the new entity. Instead the company anticipated that there would be ongoing difficulties between her and Mr Chatha and did not therefore want her contract to transfer. As the reason for the dismissal was the transfer, she had been unfairly dismissed.
The company appealed on the basis that, having found that she was dismissed because of a difficult working relationship with Mr Chatha the tribunal could not then conclude that the principal reason for the dismissal was the transfer, an argument that was dismissed by the EAT.
Decision of Court of Appeal
The Court of Appeal held that, although the law recognised that a dismissal could be fair for economic, technical, or organisational reasons entailing changes in the workforce, the law did not recognise a category of fair dismissal for personal reasons.
It was clear in this case that Mr Chatha and Ms Kaur had had a poor relationship for some time without H&W seeking to terminate her employment. As such, there was a clear inference that the transfer (rather than the poor relationship in isolation from the transfer) was the reason or principal reason, given that it occurred immediately before the transfer.
As the tribunal itself established, the transferee company anticipated that there would be ongoing difficulties in the working relationship between Ms Kaur and Mr Chatha. It therefore decided that it did not wish her contract of employment to transfer and communicated that wish to the transferor. That was why she was told that she was not wanted. The reason for the dismissal was therefore the transfer, not any personal animosity between Ms Kaur and Mr Chatha.