The Claimants were electricians working on maintenance of social housing and were originally employed by a local authority.  Under their contracts of employment they were entitled to be paid an Electricians’ Travel Time Allowance (ETTA) which dated back to 1958. At this time the electricians were required to travel between various depots, most of which had closed over time.

When their employment transferred to Mears in 2008, Mears unilaterally ceased payment of the ETTA due to the change in working practices. A group of electricians brought a claim against Mears for unlawful deductions from wages, and the EAT upheld their claim.

Following the EAT’s ruling, in 2012 Mears gave notice that it was going to end the ETTA. Some of the electricians brought another claim, which was the subject of this litigation. They argued that the variation to their terms and conditions was void under regulation 4(4) TUPE as it followed a transfer.

The Employment Tribunal (ET) dismissed the Claimants’ claims, and the Claimants appealed to the EAT.

EAT decision

The EAT upheld the ET’s decision and dismissed the Claimants’ appeal. The EAT found that the reason for Mears’ decision to end the ETTA payments was not the TUPE transfer but the fact that it believed that the payment was outdated and unjustified. This was a pre-existing belief and did not arise purely on the occasion of the transfer. It would have been an issue for the employer whether or not there had been a transfer. Accordingly, the change to the employees’ terms and conditions was not void.

What to take away

This decision will be welcomed by employers acquiring employees as a result of an outsourcing or retendering process, as it confirms that there will be circumstances in which it is permissible to change the employees’ terms and conditions, notwithstanding the TUPE transfer. What is important is that employers can establish that the reason for the change would have applied regardless of the transfer. In this case the employer’s decision was not motivated, for example, by a desire to harmonise terms and conditions, which is a common reason for post-transfer changes and why such changes are rarely permissible.

Incoming employers who wish to make changes to employees’ terms and conditions following a TUPE transfer must ensure that they clearly identify and document the reason for the change, which is not the transfer itself.

Although this decision was reached on the basis of the pre-2014 TUPE legislation, it is likely that the same conclusion would have been reached on the basis of the new regulation 4(4), which states that post-transfer changes will be void if the sole or principal reason for the change is the transfer.

For further information on how this issue might affect your organisation, please contact Raj Basi, Ron Simms or Victoria Watson.