Dismissal due to problem working relationship related to business transfer

An employee’s dismissal on the day of a business transfer was automatically unfair.  Although she was dismissed due to problems in her working relationship with a colleague (who was to become a director of the new owner) , the employment tribunal had been entitled to find that she was dismissed because the new owner did not want to take her on and so the transfer was the sole or principal reason for dismissal.

Facts

In Hare Wines Ltd v Kaur, Ms Kaur worked as a cashier in a wine wholesale business. The directors decided that the business should cease trading for financial reasons and that the business and employees should transfer to Hare Wines Ltd.  Mr Windsor met with Ms Kaur on the day of the transfer and told her that she was being dismissed. There was a long conversation about Mr Chata (who was to become a director of the new owner) not wanting Ms Kaur because of their difficult working relationship, although the dismissal letter merely stated that she was being dismissed because the company was ceasing to trade. 

Ms Kaur claimed that her dismissal was automatically unfair because it was related to the transfer and the employment tribunal agreed. Mr Windsor anticipated difficulties between Ms Kaur and Mr Chata and so did not want her employment to transfer.  This meant that the transfer was the sole or principal reason for dismissal.   

Hare Wines appealed to the Employment Appeal Tribunal and then to the Court of Appeal.

Decision

The Court of Appeal rejected the appeal.  Ms Kaur had been dismissed on the day of the transfer (which was strong evidence of a link with the transfer) and the poor working relationship between Ms Kaur and Mr Chata had been ongoing for some time without any prior attempt to terminate her employment.  Termination took place at the transferee’s request and the employment tribunal had been entitled to rule that Ms Kaur’s dismissal was because of the transfer and so automatically unfair.   

The Court of Appeal rejected Hare Wines’ argument that a distinction should be drawn between a case where the transferee refuses to take on any of the existing workforce (where dismissal would be because of the transfer) and a case where it picks one or two employees to be dismissed for purely personal reasons and takes on the rest (where dismissal would not be because of the transfer). 

Implications

Employers need to exercise caution when dismissing an employee around the time of a TUPE transfer. Even if they believe that they have a legitimate reason for dismissal which is personal to the employee, it can be difficult to break the link with the transfer, meaning that there is a risk that the dismissal will be found to be automatically unfair. The transfer should not be used as an opportunity get rid of a problem employees. Instead, the transferee should deal with any problems as they arise after the transfer following fair procedures.