Employment Judge FitzgeraldMs A Penkethman - Solicitor for claimantMr Howells - Counsel for respondentDate 10 May 2024
JUDGMENT
[1]The Claimant’s claim of failure to inform and consult under the Transfer of Undertakings (Protection of Employment) Regulations 2006 fails.[2]The Claimant’s claim of automatic unfair dismissal fails.[3]The Claimant’s claim of constructive dismissal fails.[4]The Claimant’s claim of wrongful dismissal fails.[5]The Claimant’s claims against the Respondent are dismissed in their entirety.
REASONS
[1]At the outset of the hearing it was established that there was an agreed list of issues. Case No: 1304698/2023[2]The Claimant’s claim is for:a. failure to inform and consult under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE);b. automatic unfair dismissal;c. constructive dismissal;d. wrongful dismissal. Procedure, documents and evidence heard[3]We had before us a bundle of documents running to 329 pages and an agreed list of issues.[4]The Claimant provided a witness statement and gave oral evidence on his own behalf.[5]The Respondent provided a witness statement for Mr Stephen Wood and Mr Wood gave oral evidence.[6]We were provided with skeleton argument and authorities from both parties and heard oral submissions.[7]Finally we had a schedule of loss from the Claimant.
Facts
[8]The Claimant started working for Grainger and Worrall Engineering Limited (GWE) on 17 March 2014. He was initially employed as a Foundry Operative.[9]In May 2019 the Claimant was involved in a serious workplace accident which resulted in him losing most of his right hand. The Claimant was off for a period of time to recover and when he returned to work the Covid pandemic had started which resulted in further disruption. However, GWE supported the Claimant back to work and altered his duties as he was unable to perform most of his foundry role. The Claimant later became a Production Operative and his duties were more focussed on quality control – although we do note that the job title in the last 2 contracts stated foundry operative.[10]Throughout the years he worked for GWE the Claimant worked under a series of employment contracts with some difference to his shift pattern.a. Contract 1 – page 51 – 37 hours per week with shift premium of 33% - lateshift 4.30 – 2.15amb. Contract 2 – page 49 – 46 hours per week with shift premium of 37% - nightshift 6-6c. Contract 3 page 57 – 46 hours per week with shift premium of 37% - nightshift 4.30 – 4.30amd. Contract 4 – page 59 – 37 hours per week with shift premium of 33% - lateshift 4.30pm – 2.15e. Contract 5 – page 65 – 46 hours per week with shift premium of 37% - nightshift 4.30 – 4.30 Case No: 1304698/2023f. Contract 6 – page 87 – 46 hours per week with shift premium of 30% - nightshift 6 – 6g. Contract 7 – page 112 - 46 hours per week with shift premium of 25% - nightshift 6 – 6h. Contract 8 – page 129 and we find that this was the contract that was in place at the relevant time that this claim relates to and the contract that passed to the Respondent under TUPE. The Claimant signed this contract on 21 September 2022.[11]The contract goes on to list 7 different shift patterns with differing start and finish times and different numbers of total hours. In addition different shift premia apply.[12]We find as a matter of fact that the Claimant’s working pattern did vary throughout his employment and his statement in paragraph 3 of his witness statement that he worked a 12 hour nightshift from 6-6 totalling 46 hours for 9 years is not a completely accurate statement. Whilst we accept that for the majority of his time the Claimant worked either a nightshift or a late shift this was not without exception.[13]GWE were struggling financially and this particularly was the case from mid-2022 onwards. We have been presented with evidence from the administrators report which was prepared on their appointment (page 171) and this makes clear that the company were considering a range of options to assist with downturn in activity. In the end the company decided to enter into administration and a sale immediately took place to the Respondent – both on 7 March 2023 – and the administrators believed that this was the best way forward. The Claimant was one of 36 employees who TUPE transferred to the Respondent on the sale of the business.[14]Mr Wood is employed as Operations Director for the Respondent. He has given evidence that there were a number of conversations going on over a period of months about potential purchase of GWE by the Respondent, although in the end it all happened quickly and Mr Wood was quickly engaged to start managing GWE back to profitability and to attend the Worcester site to speak to employees.[15]We find that GWE did not undertake any process of informing and consulting with staff whatsoever as they were required to under TUPE. Equally based on Mr Wood’s evidence the Respondent did not provide GWE with details of any ‘measures’ that they intended to take as regards the affected employees. Case No: 1304698/2023[16]Therefore the sale of the business was a surprise to the Claimant and his colleagues.[17]For a number of months prior to the transfer the Claimant along with some colleagues had been seconded to the GWE parent company site in Bridgnorth- this was to help with resolving some issues. During that period we find, supported by documents in the bundle that the Claimant worked nightshifts and also day shifts -the latter being to assist with training colleagues and was for a period 19 Jan until 23 February 2023.[18]The Claimant returned to work at the Worcester site on nightshifts just prior to the transfer. We find that the transfer took place on the evening of 7 March 2023 and Mr Wood and a colleague (owner of the Respondent, Chris Shield) travelled to meet GWE employees on 8 March 2023. They spoke to those on the day shift although the Claimant was not at that meeting as he worked the nightshift and so he was told later that day about the sale of GWE by his supervisor, Paul Taylor.[19]At that point GWE management told the nightshift employees including the Claimant that they would need to move to day shifts as there was no work on nights. Mr Wood was not aware of this at the time, but once he found out he agreed with this decision due to the lack of work. The Claimant and his colleagues agreed to move to a day shift on a temporary basis and this was with effect from Monday 13 March 2023. The Claimant remained on 46 hours, as he did throughout until his employment ended, and at that stage he continued to be paid his nightshift premium – that payment continued for 3 weeks.[20]Mr Wood met with the staff on a weekly basis thereafter on a Wednesday to undertake consultation. Members of the employee forum also attended this meeting as well as staff and Mr Wood describes them as collective consultation (although this was not in the formal legal sense). The meetings were focussed on how to bring in new work and make the business a success and profitable again. Mr Wood raised matters such as energy use at the site, contracts (including the coffee machine which had to be returned as the loan company were demanding it back) and also how the shift patterns would best work given the current downturn in work. For example there was a discussion about potentially getting all employees onto the day shift with the same hours.[21]Mr Wood said that no decisions had been made regarding the medium or long term future because he didn’t know what changes would be required and he was trying to get to know the business.[22]At one of the Wednesday meetings on 22 March 2023 the Claimant and other nightshift colleagues asked Mr Wood whether they would continue to get their nightshift premium even though they were working the dayshift at that point. Mr Wood said that he would need to check their contracts. Case No: 1304698/2023 When he did so he viewed the Claimant’s 21 September 2022 contract as referred to above which includes the flexibility clause.[23]Mr Wood met with the Claimant in a 1-1 on 27 March 2023 and informed him that his contract contained the flexibility clause and therefore the rge Respondent could ask him to work on a different shift and pay the shift premium applicable to that shift. At that meeting Mr Wood communicated his decision that the Claimant would receive his 3 weeks nightshift premium, but then it would stop and he would only be paid the premium applicable to the shift he actually worked. Mr Wood’s position is that he explained that this was not a permanent move and the intention was to get the site busy and return to a nightshift if that was the Claimant’s preference.[24]The Claimant’s position is that he was told at that meeting that the removal of the nightshift was permanent and that the 46 hour shift the Claimant had worked was never coming back.[25]There is a clear dispute of fact here and on this point we are finely balanced but have concluded that Mr Wood did not tell the Claimant there would be a permanent change. We find that in questioning during the hearing the Claimant’s evidence was consistent with Mr Wood’s version, i.e. not that that nightshift would never come back, but that it wouldn’t be operational in the near future due to lack of work. In addition we have reviewed the contemporaneous evidence. We note the Claimant’s e-mail of resignation at page 218 which complains that Mr Wood will only put forward short term proposals. We also note Mr Wood’s e-mail on page 216 which states that nightshift working was not required in the short-term and when there is sufficient work then this will resume in the medium to long-term. At this point we understand why the Claimant reached the conclusion he did but find that the Claimant was not told that the nightshift would be permanently removed.[26]The Claimant attended a further group meeting on 29 March 2023 and then booked holiday at the last minute for the remainder of the week. He was then signed off sick and did not return to work. The Claimant sent an e-mail of resignation on 3 April 2023. His main reasons for resignation were that none of the proposed changes had been formalised in writing, and that Mr Wood would only commit to very short term proposals. He said there had not been proper consultation and reasonable notice had not been given of the changes. He said that the changes had a detrimental effect on his income and work/life balance.[27]Mr Wood replied to the e-mail of resignation and asked the Claimant to meet with him to discuss. The Claimant did not wish to do so and confirmed his resignation. The Claimant’s employment ended on 4 April 2023. The Law Case No: 1304698/2023 Failure to inform and consult
The Law
[28]Regulation 15(9) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) sets out that the transferee shall be jointly and severally liable with the transferor in respect of compensation payable under regulation 15(8)(a) or regulation 15(11).[29]Regulation 15(8) applies where the Tribunal finds a complaint against a transferor well-founded.[30]Regulation 15(11) TUPE identifies an alternative gateway to making a transferee liable, namely where there has been a finding against the transferee under reg 15(7). That in turn requires a finding that a complaint under reg 15(1) is well-founded. On this point, the EAT in Allen v Morrisons Facilities Services Ltd UKEAT/0298/13/DM held [35]: “In our judgment, whether or not they transfer, Regulation 15(5) provides the exclusive route for an affected employee of a transferor to obtain compensation from a transferee. The relevant obligation owed to affected employees of the transferor is that imposed on the transferor by Regulation 13(2)(d). The affected employees of the transferor at the time of the breach by them of that obligation may bring a claim under Regulation 15(1)(d). The transferor may have communicated to their affected employees the measures they envisage the transferee would take, taking into account information given to them by the transferee. The transferor may have a successful defence to the claim. It is only if the affected employees bring a claim against the transferor and the transferor alleges that the transferee had failed to give them the requisite information at the requisite time in accordance with regulation 13(4) and give the transferee notice under Regulation 15(5) that the transferee is made a party to the proceedings. It is clear from the Regulations that the transferee cannot be made a party to the proceedings by any other means. An Order can only be made against a transferee if the Tribunal finds the complaint against the transferor under Regulation 15(1) well founded and the transferor shows that the transferee failed to perform their obligations under Regulation 13(4).” Constructive dismissal[31]The Employment Rights Act 1996 sets out in section 95(1): (1)For the purposes of this Part an employee is dismissed by his employer if (and, subject to subsection (2), only if) – Case No: 1304698/2023 … (c) the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct."[32]Lord Denning in Western Excavating v Sharp 1978 QB 761 stated "If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed."[33]It is recognised that in addition to express terms of contract there is an implied term of trust and confidence which applies to the employment relationship. Under this term, the employer must not, without reasonable and proper cause, act in a manner calculated or likely to destroy or seriously damage the mutual trust and confidence between employer and employee.[34]The following elements must be in place to establish constructive dismissal: there must be a repudiatory breach of contract; the employee must resign in response to the breach and the employee must not delay too long in accepting the breach. Automatic Unfair Dismissal and Wrongful Dismissal (TUPE)[35]Regulation 4(9) of TUPE provides as follows: “Where a relevant transfer involves or would involve a substantial change in working conditions to the material detriment of a person whose contract of employment is or would be transferred under paragraph (1), such an employee may treat the contract of employment as having been terminated, and the employee shall be treated for any purpose as having been dismissed by the employer”.[36]Regulation 7 of TUPE provides: “(1) Where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee is to be treated for the purposes of Part 10 of the 1996 Act (unfair dismissal) as unfairly dismissed if the sole or principal reason for the dismissal is the transfer. Case No: 1304698/2023 (2) This paragraph applies where the sole or principal reason for the dismissal is an economic, technical or organisational reason entailing changes in the workforce of either the transferor or the transferee before or after a relevant transfer. (3) Where paragraph (2) applies-(i) Paragraph (1) does not apply;(ii) Without prejudice to the application of section 98(4) of the 1996 Act (test of fair dismissal), for the purposes of sections 98(1) and 135 of that Act (reason for that dismissal) (i) The dismissal is regarded as having been for redundancy where section 98(2)(c) of that Act applies; or (ii) In any other case, the dismissal is regarded as having been for a substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held”.[37]It is for the employer to show that the reason or principal reason for dismissal is not the transfer (Kuzel v Roche Products Ltd [2008] IRLR 530 (CA)). “The reason for dismissal consists of a set of facts which operated on the mind of the employer when dismissing the employee. They are within the employer’s knowledge…the employer knows better than anyone else in the world why he dismissed the complainant…an employer who dismisses an employee has a reason for doing so. He knows what it is. He must prove what it was”.[38]Regulation 4(10) TUPE states: (10) No damages shall be payable by an employer as a result of a dismissal falling within paragraph (9) in respect of any failure by the employer to pay wages to an employee in respect of a notice period which the employee has failed to work. Conclusions Failure to inform and consult under TUPE.
Conclusions
[39]We have analysed this in accordance with the legal authorities quoted to us. As a matter of fact and on the evidence before us we have found that GWE did not comply with its obligations under TUPE to inform and consult Case No: 1304698/2023 with representatives of affected employees as it was required to do under TUPE. Equally the Respondent did not comply with its obligation under Regulation 13 (4) to provide information relating to measures to GWE to enable them to carry out that obligation effectively.[40]We have been referred to authority and have particularly found helpful the comments of the Employment Appeal Tribunal (EAT) in Allen v Morrisons. In that case the EAT made clear that regardless of whether an employee transfers or not Regulation 15(5) provides the exclusive route for an affected employee of a transferor to obtain compensation from a transferee. The relevant obligation owed to affected employees of the transferor is that imposed on the transferor by Regulation 13(2)(d). The affected employees of the transferor at the time of the breach by them of that obligation may bring a claim under Regulation 15(1)(d). In this case at the time the breach occurred the Claimant was an employee of GWE.[41]The EAT makes clear that the only route for an employee in the position of the Claimant to bring a claim against the transferee is to lodge the initial claim against the transferor. If the transferor alleges that the transferee had failed to give them the requisite information at the requisite time in accordance with Regulation 13(4) they then give the transferee notice under Regulation 15(5) that the transferee is made a party to the proceedings. The EAT said that it is clear from the scheme of the Regulations that the transferee cannot be made a party to the proceedings by any other means. An Order can only be made against a transferee if the Tribunal finds the complaint against the transferor under Regulation 15(1) well founded and the transferor shows that the transferee failed to perform their obligations under Regulation 13(4).[42]The EAT made clear that there is there is no independent cause of action which can be pursued by claimants against the respondent transferee in these circumstances.[43]In this case before us we have considerable sympathy with the Claimant and the relevant obligations were not complied with, however we are bound by the authority of the EAT and their interpretation of the statutory scheme set out in TUPE. We find that the Claimant is not in law, able to succeed in a free-standing claim against the transferee, the Respondent, and therefore this claim fails. Constructive Dismissal[44]At the outset of the hearing it was confirmed that the Claimant wishes to rely on 3 aspects of the Respondent’s conduct to bring a claim of constructive dismissal under s95 of the ERA 1996. In order to assess this claim we have based our findings on the list of issues.[45]First issue - Implied term by custom and practice that entitled the Claimant to still receive the nightshift premium when working a different shift and Case No: 1304698/2023 that on 27 March Mr Wood told the Claimant his nightshift would be replaced permanently and shift premium would cease.[46]We have analysed the contracts in our findings of fact and we have found that it was the 7th contract – September 2022 contract that was in place. We find that the Claimant agreed to the terms of this contract and it was in force. We noted the Claimant’s evidence that he didn’t believe the Respondent would actually rely on the contract to change his shift without consultation and agreement, but nevertheless the express terms are very clear. We note that the Claimant objected to matters in the past and the Respondent dealt with them including contractual matters by way of grievances, so if the Claimant had not wished to sign the contract he could have done the same here - but he did not, he signed the contract and it is valid. There are 2 relevant aspects on the custom and practice issue. Firstly we do not believe that an implied term of custom and practice can override a clear express terms, especially in circumstances where the express term was agreed very recently – the 2022 contract was quite a new one. Secondly looking at the pattern of the Claimant’s work he had 8 contracts and it is clear that whilst he worked the nightshift for the majority of the time, over the years his shifts, premia and hours did vary by agreement from time to time and even recently when at Bridgnorth he worked the day shift for a period of months, albeit with no change in pay. Therefore it is not the case that we are dealing with a Claimant who has worked exactly the same hours and pay for 9 years without change.[47]We find there was no implied term of custom and practice in the terms argued by the Claimant and therefore there was no breach.[48]Second issue – breach of an express term providing for 4 weeks’ notice of a permanent change. In our findings of fact we have found that there was no permanent change here and therefore the 4 weeks’ notice set out in the contract was not engaged in the Claimant’s case. Although not set out in the list of issues we have considered the issue of the ‘reasonable notice’ to be given on the temporary change. On this point we accept Mr Howell’s contention that this was met with the Claimant and others being told on the 8 March that the nightshift would stop for now and they agreed to commence day shifts from the following Monday. We find the requirement for reasonable notice was met. We agree that the full 3 weeks paid was a payment made in the employer’s discretion and is not strictly related to this contractual notice issue.[49]Finally, we have assessed the alleged breach of the implied term of trust and confidence – behaving unreasonably in respect of the variation – not consulting and saying that consultation was not necessary and Mr Wood saying that the Claimant should accept the variation or resign. The Claimant also references being spoken to in a degrading and insulting way. In relation to the contractual points here, we have found that the contract of September 2022 was valid and this means that with the correct notice the Claimant could be moved onto a different shift pattern. The contract itself does not require consultation. We conclude that in this Case No: 1304698/2023 aspect the Respondent was acting in accordance with the contract and this cannot amount to a breach of trust and confidence. As regards the ultimatum and the degrading and insulting behaviour the Claimant did step back from both of these in his witness evidence at the hearing – stating that effectively Mr Wood said – ‘it is what it is’ and also the behaviour was not insulting or inappropriate in itself – rather just that Mr Wood was saying that he didn’t need to consult on the shift change – which we agree is in accordance with the contract. We are sure that emotions were high at this difficult time, but we have seen no evidence that would suggest that Mr Wood’s behaviour was in breach of the implied term of trust and confidence.[50]In conclusion therefore we find that there was no repudiatory breach of the Claimant’s contract of employment and therefore the claim of constructive dismissal under the Employment Rights Act 1996 fails. Automatic Unfair Dismissal[51]Here we are focussed on Regulation 4(9) of TUPE and whether the relevant transfer involved a substantial change in the working conditions to the material detriment of the Claimant.[52]We find that the Claimant relies on the change away from the nightshift and the resulting drop in pay and flowing on from this that he had set up his life and routine around the nightshift pattern.[53]We have already concluded that the Respondent did not act to breach the Claimant’s contract, but it is established by caselaw that for a Regulation 4(9) claim this is not required. In fact a Respondent can act in accordance with a Claimant’s contract and there can still be a substantial change to material detriment for the purposes of this section. We have also found that the Respondent was not making a permanent change to the Claimant’s contract, but nevertheless we are struck by the impact of the changes on the Claimant. Given his working pattern even a short-term change to the day shift was detrimental to the Claimant’s routine and set up with him driving from Poole to work. Also there is no question that the changes involves a cut in pay which was over 20%.[54]We therefore find that under Regulation 4(9) the Claimant was dismissed.[55]We then have to go on to determine the reason for the dismissal.[56]We have reviewed Regulation 7 of TUPE and assessed whether the reason for dismissal was the transfer or whether it is an economical, technical or organisational reason entailing changes in the workforce (ETO reason). The dismissal took place when the Claimant resigned and so it is the period between 7 March and 3 April 2023 we are looking at to assess whether the Respondent’s actions in that time – and which here amounted to substantial changes to the material detriment of the Claimant – were for an ETO reason. What were the reasons behind temporarily moving the Case No: 1304698/2023 Claimant from the nightshift and reducing the shift premium? We have heard evidence from Mr Wood that his decisions, and the Respondent’s decisions at this time were due to the business struggling financially and this was very serious, there has been a downturn in work and indeed at that point very little work coming in. We find that the Respondent wanted to reduce costs (the nightshift was more expensive to run) and reduce energy and this was focussed on seeking to turn around the business. Mr Wood was also actively consulting with employees and reps about the best way to run the shifts. In these circumstances we find that the reason for the dismissal was an economic and organisational reason entailing changes in the workforce and therefore 7(2) applies.[57]We then need to move on to find the reason for dismissal as either redundancy or for some other substantial reason (SOSR). Given the flexibility in the Claimant’s contract and the fact that the Respondent was never seeking to run a redundancy process (given difficulties in recruiting) we do not believe that this situation meets the definition of a redundancy in s139 Employment Rights Act.[58]We believe the dismissal is more appropriately viewed as an SOSR dismissal.[59]But matters do not end there and we have to go on to consider whether the dismissal was fair bearing in mind normal s98 Employment Rights Act fairness principles. It is slightly unusual to assess the fairness of an SOSR dismissal in respect of Regulation 4(9) as the Claimant was not actively dismissed and in this situation he resigned very quickly after the change. However what we would expect to see in an SOSR dismissal is consultation and also assessment of different options for the affected staff. We find that Mr Wood was consulting with the Claimant – and others – and was genuinely listening to their views (which is demonstrated by the fact that the arrangements later implemented in August 2023 were influenced by what staff wanted). Further Mr Wood met with the Claimant personally and also offered this again when he was asking him to reconsider his resignation. Therefore in the way we can assess it we find the dismissal for SOSR to be fair. Wrongful Dismissal[60]Finally we turn to the claim of wrongful dismissal as we have found that there was a dismissal here, albeit not unfair.[61]Regulation 4(10) TUPE stipulates that ‘no damages shall be payable by an employer as a result of a dismissal falling within Regulation 4(9) in respect of any failure by the employer to pay wages to an employee in respect of a notice period which the employee has failed to work’.[62]We note that his provision was added only at a late stage in the drafting of the Regulations, when the Government was persuaded during the public consultation process that it was not right for the employer to be penalised Case No: 1304698/2023 for failing to give notice of termination in a situation where the employee resigned but was treated as having been dismissed by the employer.[63]The effect is that the claim of wrongful dismissal cannot succeed.