Legal ruling may hit outsourcing claims

More people could resign and claim compensation for unfair dismissal if their company is taken over by another firm whose offices are further away following an Employment Appeals Tribunal (EAT) ruling, an employment law expert has said.

The ruling interprets the law governing transfers of staff from one company to another in a way that makes it easier for employees to decide not to transfer to the new company and claim unfair dismissal as a result. The Transfer of Undertakings (Protection of Employment) (TUPE) Regulations govern such transfers.

"TUPE Regulations say that if in advance of the transfer happening the employee thinks that the new employer is going to make a substantial change in working conditions that results in a material detriment to them they can resign and claim unfair dismissal," said Ben Doherty, an employment law specialist at Pinsent Masons, the law firm behind OUT-LAW.COM.

The case involved a Ms C Tapere, who resigned from then sued South London and Maudsley NHS Trust for unfair dismissal.

Tapere worked for Lewisham Primary Care Trust (LPCT) in Camberwell. She was transferred along with two other employees to another hospital, this one in Beckenham.

Tapere objected to the extra distance the new place of work was from her home. Though the hospital trust said that it had tried to accommodate her and offered to allow her to start work 15 minutes later, Tapere resigned and claimed unfair dismissal.

Whether or not Tapere could claim unfair dismissal depended on whether or not she had suffered 'material detriment'.

"Here the change of location meant potential disruption to child care arrangements and a longer journey or an altered journey involving travelling on the M25, which [Tapere] did not find attractive," said the EAT ruling. "The questions that ought to have been asked were whether the employee regarded those factors as detrimental and, if so, whether that was a reasonable position for the employee to adopt? In determining the matter by weighing the employee's position against that of the employer and deciding that the employer's position was reasonable, the Employment Tribunal looked at the matter from the wrong standpoint and thus misdirected itself as to the correct approach to [the TUPE Regulations]."

"This ruling looks at the meaning of material detriment and mainly the word 'material'," said Doherty. "The EAT said that in deciding whether the employee has been subject to a material detriment the Tribunal should not apply an objective test. What the Tribunal should do is consider the employee's position and ask 'whether it is reasonable in the circumstances for him to adopt that position'."

Doherty said that the ruling makes it more likely that other people will successfully claim to have suffered 'material detriment' when they are moved from one employer to another, such as when one company takes over another.

"This makes it easier for an employee to satisfy the test that there has been a detriment," he said. "A Tribunal has to consider whether it was reasonable to hold the view rather than whether it would have held the view, and that's a lower threshold."

See: The ruling

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