Where a transferee has no need for the employees transferred to it under TUPE, can the selection pool for redundancy include only the transferred employees, or must it also include the transferee's existing workforce?
Whether or not the pool for redundancies following a transfer must include the transferee's existing workforce depends on the circumstances.
In the event of a TUPE transfer, where the sole or principal reason for a dismissal is the transfer, the dismissal will be automatically unfair. However, if the dismissal is for an economic, technical or organisational (ETO) reason entailing changes in the workforce, it will not be automatically unfair.
In redundancy situations the selection pool normally includes only the employees who are required, under their contracts of employment, to do the potentially redundant work. Following a transfer, where the transferred employees are doing a specific job under their contracts of employment that none of the transferee's existing employees can be required to do (for example if the transferred employees are working on a specific product or carrying out a specific function, for which there will no longer be a requirement), it is likely that the pool will comprise only those employees transferred. This is because it is only those employees who are required to carry out the reduced work. The dismissals will be for an ETO reason, because the work that the employees do no longer exists.
However, where the transferee's existing employees can be required under their contracts to do the same work as the employees who have transferred, the existing employees should also be included in the selection pool. If the employer includes only the transferred employees in the pool, it is arguable that the principal reason for the dismissals is the transfer, as the selection has been made purely on that basis, making the dismissals automatically unfair. Even if the employer is able to show an ETO reason for the dismissals, it still needs to be able to show that the selection process is fair (under the usual requirement of reasonableness). Selection based on the fact that employees have transferred, rather than on other objective criteria, is unlikely to be reasonable.