Hare Wines Limited v (1) Mrs Satwant Kaur (2) H&W Wholesale Limited, UKEAT/0752/16/JOJ (17 October 2017)
What has been decided?
Where an employee had been automatically unfairly dismissed because of a business transfer, the employer appealed on the grounds that the dismissal had been for personal reasons, and so the dismissal was not for the ‘sole or principal’ reason of the tranfer. The EAT considered whether this might afford a defence for employers, and decided it could not. It was important to consider worker’s rights, and the need to be careful in expanding the categories of employers’ defences. Where there were several possible reasons for a dismissal, it was necessary to determine the strongest reason leading to the decision: this was the ‘principal’ reason for the purposes of the TUPE regulations.
K was employed as a cashier in a wine and beer wholesale business, H&W. When that business got into financial difficulties, a new business, H, agreed to purchase the stock and to take on any employees on the basis that the Transfer of Undertakings (Protection of Employment etc) Regulations 2006 applied to the transaction. H&W was dissolved a short time later.
H assumed responsibility for the contracts of employment of all of the existing employees of H&W with the exception of K, who at a subsequent tribunal hearing was found to have been dismissed two days prior to the transfer.
K successfully made a TUPE claim, and was held to have been automatically unfairly dismissed. K’s claim had been that the sole or principal reason for her dismissal was the transfer of the business to H, which was automatically unfair pursuant to Regulation 7 of TUPE 2006.
At first instance, H had adopted H&W’s position and maintained that at a meeting that took place 2 days prior to the transfer, K had objected to any transfer and therefore, by reason of Regulation 4(7) TUPE 2006, the liability for any of the claims brought by the K either remained with the dissolved H&W or had otherwise been extinguished. A key issue for the tribunal was whether or not there had been a dismissal.
The tribunal held that K did not object for the purposes of Regulation 4(7) and that the reason was the transfer. There was a dismissal, which was therefore automatically unfair, with liability resting with H.
H was given permission to appeal. H claimed that liability was contingent on a finding that K was dismissed by reason of the transfer. But H pointed to a finding in the tribunal’s decision that the reason for the dismissal was the anticipation of “ongoing difficulties” in the working relationship between K and a manager at H&W who was due to become a director at H.
At appeal, H argued that the tribunal had moved immediately from a finding that the dismissal was because of anticipated difficulties in the working relationship to a conclusion that the reason for the dismissal was the transfer. H submitted that the tribunal had fallen into error in assuming from the proximity of the TUPE transfer it would naturally follow that any dismissal would be by reason of that transfer, notwithstanding findings that suggested relationship difficulties were a reason for the dismissal.
Counsel for H asked the EAT to find that, where the reason for dismissal was ‘entirely personal’, it could not satisfy the stricter requirements of the post-2014 amended TUPE regulations, the ‘sole and principal reason’ test. K’s counsel responded that introducing an ‘entirely personal’ reason defence would create a new defence for employers, and defeat the purpose of the regulatory protections.
The EAT’s decision
The Hon. Mr Justice Choudhury QC held that while the transfer must be the sole or principal reason, this was a matter to be determined with regard to all the circumstances. There could be no ‘purely personal reasons’ defence, which would have the effect of creating a mutually exclusive reason for transfer (that is, with dismissal either because of the transfer, or otherwise for personal reasons). It was important to consider worker’s rights, and the need to be careful in expanding the categories of employers’ defences. It was also clear from European Court of Justice’s judgment in P Bork International A/S v Foreningen af Arbejdsledere I Danmark  IRLR 41 that a particularly important factor in determining the reason for dismissal was its proximity to the transfer.
In this case, the existence of an ‘ongoing situation’ was a relevant consideration, since the reason had not been acted upon in the past. The significant factor was that the relationship difficulties were ongoing: they had been in existence before the transfer and were expected to continue thereafter. Where an employer has failed to address a difficulty prior to transfer, but only acts on transfer, it is open to the tribunal to identify the transfer as the stronger reason for the dismissal. It is not unusual that an employee has to put his case on the basis of the strongest reason where there are several possible reasons he might seek to rely on. The appeal involved a decision where there had been more than one possible reason: but the transfer was the strongest reason, and so satisfied the ‘principal reason’ test.