Is removal of a contractual travel allowance following a TUPE transfer void?
Prior to January 2014, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) provided that any variation to a contract of employment was void if the sole or principal reason for the variation was the transfer itself; or a reason connected with the transfer that was not an economic, technical or organisational reason entailing changes in the workforce. TUPE was amended in 2014, although the principles in this case will still be relevant under the current rules.
The employees were electricians whose employment had been subject to a number of TUPE transfers. With their original employer, they had been entitled to receive Electricians Travel Time Allowance (ETTA). The ETTA had been in existence since 1958 and the original purpose was to compensate electricians for the loss of a productivity bonus caused by the need to travel to different depots. Initially, the original employer had 30 – 40 depots, but these had closed over time and only one remained. Productivity bonuses had also been phased out.
Although the reasons for the allowance had ceased to exist over the years, the allowance continued to be paid until the transfer to the current employer (M Ltd), which happened in 2008. As a result of litigation between M Ltd and the employees, it was determined that the employees had a contractual entitlement to the ETTA. However, in 2012 M Ltd gave notice that it was bringing the contractual entitlement to an end on the basis that it was outdated.
The employees objected to the ending of the ETTA. They argued that the reason for the variation to their contractual terms was the TUPE transfer; and that the change was therefore void.
The Employment Tribunal disagreed with the employees. It found that the contractual variation was made because ETTA was an outdated and unjustified payment, not for a reason connected with the transfer. In any event, the Tribunal found that the employees had not met the conditions for payment of the ETTA, having not submitted claim forms to the employer for it. They were therefore not entitled to payment of the ETTA.
The Employment Appeal Tribunal agreed. The Tribunal was entitled to find that the reason for varying the employees’ terms of employment was because of M Ltd’s belief that the ETTA was outdated; and that this was unrelated to the earlier transfer.
Where an employer to whom employees have transferred under TUPE wishes to change the employees’ terms of employment, it is important to ask whether the reason for that change relates back to the transfer. This case may be useful guidance for employers, but the factual reason for any variation to terms and conditions will depend on the circumstances and will need to be assessed on a case by case basis. The key question will be – what was the reason the employer acted as it did?
Employees who are unhappy with a change to their terms and conditions of employment have other possible options, including resigning and claiming constructive dismissal if they believe that the change is a repudiatory breach of contract. It is therefore important for employers to consider seeking advice before varying an employee’s terms and conditions of employment.
24 September 2018
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©2018 SCRASE LAW LTD. THIS POST IS FOR GENERAL INFORMATION ONLY AND IS NOT ADVICE. YOU ARE RECOMMENDED TO SEEK COMPETENT PROFESSIONAL ADVICE BEFORE TAKING ANY ACTION ON THE BASIS OF THIS POST