160: Pre-transfer dismissal due to a difficult working relationship was TUPE-related

Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) a dismissal will usually be automatically unfair if the sole or principal reason for the dismissal is the transfer (Regulation 7(1)). In Hare Wines Ltd v Kaur, the Court of Appeal had to consider whether it was automatically unfair to dismiss an employee shortly before a TUPE transfer because of her poor working relationship with a colleague who would have become her manager after the transfer.

Mrs Kaur worked as a cashier at H & W Wholesale Ltd, a wine and beer wholesaler. She had a difficult relationship with a colleague, Mr Chatha. When the business got into financial difficulties, Hare Wines Ltd agreed to purchase stock and take on employees on the basis that TUPE applied. However, Mrs Kaur’s employment was terminated on the day of the transfer. All other staff transferred to Hare Wines Ltd.

Mrs Kaur brought a claim for automatic unfair dismissal, alleging that the reason for her dismissal was that Hare Wines did not want her to transfer due to her strained working relationship with Mr Chatha, who would have become her manager. Hare Wines defended the claim on the basis that Mrs Kaur had told them that she was not happy to be working for them, which they took as an objection to the transfer, meaning that she had voluntarily resigned. However, the Employment Tribunal found that the company’s evidence lacked credibility since Mrs Kaur had been informed by letter that she was being dismissed and had received part of her notice pay. The Employment Tribunal concluded that she did not object to the transfer and was dismissed because Hare Wines did not want her due to the ongoing difficulties with Mr Chatha. She had therefore been unfairly dismissed by reason of the transfer.

Hare Wines appealed to the Employment Appeal Tribunal (the EAT), arguing that since the Employment Tribunal had found that Mrs Kaur had been dismissed for entirely personal reasons, namely her difficult relationship with Mr Chatha, it could not be said that the reason for the dismissal was the transfer. The EAT dismissed this argument, noting that the company had falsely claimed that Mrs Kaur had objected to the transfer and left voluntarily; that she had been dismissed very close to the transfer; and that the difficulties with Mr Chatha had existed for some time. Where an ongoing relationship issue was suddenly addressed at the time of the transfer by dismissing one of the parties, it was open to an Employment Tribunal to conclude that the employer was motivated by the transfer. This reasoning has now also been upheld by the Court of Appeal which confirmed that the key question in such cases was whether it was the transfer which made the difference between a problem being treated as a cause for dismissal and not.

An Employment Tribunal is unlikely to be persuaded that a transfer is not the sole or principal reason for dismissal where an employer suddenly acts on a longstanding conduct, competence or relationship issue at the time of a TUPE transfer. The employer may be in a stronger position if the dismissal occurs after a proper disciplinary or performance procedure, but not if this process is accelerated at the time of the transfer or at the request of the transferee.