What is an "economic, technical or organisational reason" for dismissal under the TUPE Regulations 2006?
If the sole or principal reason for a dismissal is a TUPE transfer, the dismissal will be automatically unfair unless the reason is an economic, technical or organisational (ETO) reason entailing changes in the workforce. An ETO reason could be, for example, a reorganisation by either the transferor or the transferee for a genuine business reason, or the introduction of new technology that results in fewer employees being required. Many of the examples of ETO reasons are redundancy situations (in which case the employee may be entitled to a redundancy payment).
The ETO reason must also "entail changes in the workforce". This means that there must be changes to the overall numbers or functions of the workforce or to the location of the workplace.
An amendment to the TUPE Regulations on 31 January 2014 expanded the definition of "changes in the workforce" to include changes to the location of the workplace, aligning it with the definition of redundancy under the Employment Rights Act 1996. The amendment allows employers to dismiss employees where there is a change of workplace as a result of the transfer, without it automatically being an unfair dismissal. However, it should be noted that the Acquired Rights Directive (2001/23/EC), which the TUPE Regulations are intended to implement in the UK, does not expressly state that the phrase "entailing changes in the workforce" includes a change to an employee's place of work. Accordingly, this provision may be subject to a reference to the European Court of Justice to determine whether or not it complies with the Directive.