Additional 30-minute commute not a ‘substantial change’ under TUPE

The EAT (Employment Appeal Tribunal) accepted that a 3.5 mile change in location in London was not a ‘substantial change in working conditions’ and was therefore not a deemed dismissal under TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006).

When a business changes hands, it is not uncommon for transferring employees to have to change workplace as well. Since a change to a transferring employee’s terms and conditions is, in principle, void under TUPE (except in limited circumstances), an employee who is not happy with the change in location could:

• object to the transfer (in which case no compensation is payable to the employee);
• claim that the change is a fundamental breach of their employment contract;
• claim under TUPE that it is a substantial change to working conditions which is to their ‘material detriment’, entitling the employee to resign and claim constructive dismissal.

The ‘material detriment’ test is a special provision under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). It is usually easier for an employee to establish a ‘material detriment’ than a ‘fundamental breach’ required to claim constructive dismissal. Historically, the problem that faced many employers where a transfer involved a workplace relocation, was that if the employee could establish that the relocation was a substantial change to their working conditions which was to their ‘material detriment’, then it would be deemed a dismissal which was automatically unfair, unless the employer could establish an ETO (‘economic, technical or organisational’) reason – see further ‘Impact of 2014 changes to TUPE’ below.

In one recent case a group of bus drivers had to work out of a different location when their bus route, and consequently their employment, was transferred to another operator. They complained that the change of 3.5 miles to their workplace in central London was a substantial change to working conditions to their ‘material detriment’, or alternatively it was a fundamental breach of contract, and resigned, claiming constructive dismissal against the new bus operator.

The Employment Tribunal ruled that this change was neither a fundamental breach of contract nor a substantial change to their working conditions. Their contracts of employment with the previous bus operator provided that they would have to work out of any one of several different depots, noting that their current location was their ‘preferred work location’. However, if they had been asked to move to a different depot, as they could have been under the contract’s mobility clause, they could well have ended up in a worse position than 3.5 miles from their ‘preferred work location’. As it was, the average additional journey was 30 minutes in the morning and evening. In the circumstances this was not substantial.

For this reason the ET ruled, and the Employment Appeal Tribunal (EAT) accepted, that there was no substantial change to their working conditions. Similarly, it was also not a fundamental breach of their contracts.

The case is interesting because in another recent case, involving the same previous bus operator, with an appeal heard by the same EAT judge, some other bus drivers had succeeded in establishing that there was a substantial change in their working conditions. Their journey time had been increased by between 45 minutes and an hour and a quarter each way. This demonstrates how such cases can turn on their particular facts.

Impact of 2014 changes to TUPE

In the changes made to TUPE in January 2014, the Government recognised the difficulties that can occur with a change in location following a transfer. In theory, if the reason for a change to terms and conditions relating to a location is the transfer, then that change is void unless there is an ‘economic, technical or organisational (ETO) reason entailing changes in the workforce’ and the employee agrees to the change. More significantly, a related dismissal – whether directly or constructively – is also automatically unfair. Prior to the 2014 changes, an ETO reason had to involve a change to the numbers (i.e. involve redundancies) or entire job functions of employees transferring. Case law had also established that a change in location alone did not amount to an ETO reason. However, for transfers on or after 31 January 2014, changes in location are now expressly included in the definition of an ETO reason. Consequently, such a dismissal is no longer automatically unfair, but could still potentially be unfair under normal principles.