Where employees are dismissed as a result of a TUPE transfer, will the dismissals be unfair?

Under reg.7 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) a dismissal will be automatically unfair if the sole or principal reason for the dismissal is the transfer itself, unless it is an economic, technical or organisational (ETO) reason entailing changes in the workforce. This is the case whether the dismissal is before or after the transfer. If the dismissal is a pre-transfer dismissal the liability for the automatically unfair dismissal will pass to the transferee.

The transferor cannot rely on the transferee's ETO reason to dismiss employees before they transfer. It must have its own ETO reason relating to the conduct of its business; this is unlikely to be the case in relation to the dismissal of employees who would otherwise transfer.

An employee must meet the minimum continuous service requirement to bring a claim for automatic unfair dismissal (ie at least two years) because of a TUPE transfer. This is unlike claims relating to other automatically unfair reasons for dismissal, where there is no service requirement.

Where an employer can establish an ETO reason, the dismissal will not be automatically unfair, but will be treated as a dismissal for some other substantial reason, or redundancy, if the statutory definition of redundancy is met. The dismissal is therefore subject to the normal test of fairness under the Employment Rights Act 1996. This means that the dismissing employer can still be liable for unfair dismissal. If the dismissal is pre-transfer, the liability will remain with the transferor. If it is post-transfer, the transferee will be liable.