TUPE – London United Busways Ltd v De Marchi and anor – transferor liable for dismissal when employee objected to transfer.
In the recent case of London United Busways Ltd v De Marchi and anor, the Employment Appeal Tribunal (EAT) tackled the complex issue of the interplay between regulation 4(7) of TUPE (the right to object to a transfer) and regulation 4(9) (the right to resign when there is a substantial change in working conditions).
De Marchi (DM) was employed as a bus driver by London United Busways (LUB), operating from a garage that was a fifteen-minute walk from his house. In 2019, LUB lost the contract for operating the route that DM drove to Abellio London (AL). It was accepted that the transfer of the contract from LUB to AL was a ‘relevant transfer’ for the purposes of TUPE and that all drivers assigned to the transferred route would transfer to AL, unless they objected.
DM objected to this transfer on the basis that the route would be operated from a different garage that was over one hour from his home. DM asked LUB for redundancy as an alternative, which LUB rejected. LUB then offered DM alternative employment, which DM did not accept due to this requiring a change to his terms and conditions of employment.
LUB maintained that if DM objected to being transferred and did not want to sign a new contract of employment with LUB, his employment with LUB would end on the date of the transfer. Following the transfer, DM brought TUPE claims that depended on establishing how his employment had terminated and who was responsible for his dismissal.
In their decision the EAT found that DM had been dismissed by LUB when he objected to the transfer. The basis of this decision was as follows:
- If 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, TUPE reg 4(9) entitles, but does not oblige, that person to treat the contract as having been terminated.
- If the employee wishes to exercise this right, the employee will be treated as having been dismissed by the employer.
- Dependant on the circumstances, the employer can be either the transferor or the transferee (this is dependant on whether the date of termination pre- or post-dates the relevant transfer)..
- Where the employee objects to becoming employed by the transferee under TUPE reg 4(7) and if reg 4(9) applies, the effect of that objection is to prevent the transfer of their contract to the transferee.
- In these circumstances, despite the employee’s decision not to terminate the contract himself under Reg 4(9), Reg 4(8) operates to terminate the contract with the transferor (LUB).
- The transferor is therefore the entity the employee is treated as having been dismissed by. Any remedies which can be claimed lie with the transferor andthe employee has no remedy against the transferee.
This case was very much dependent on Reg 4(9), in that the transfer of employment involved a substantial change in working conditions to the material detriment of the employee (the change in commute time). Had there been no changes to working conditions, as is often the case when employment transfers under TUPE, and the employee objected, under Reg 4(8) his employment would have terminated upon transfer but this would not be deemed a dismissal by the transferor.
