Under TUPE legislation, liability for unfair dismissal claims automatically passes to any new employer, making businesses that have sacked staff in anticipation of a transfer less attractive to potential buyers, the Court of Appeal has ruled.
The Court confirmed that it did not matter whether the new employer was known, had been identified or even contemplated at the time of the dismissal. They would still be liable, although any claim would have to be brought within three months as usual.
In the case of whiteboard manufacturer Spaceright Europe Ltd v Baillavoine and another, the Court of Appeal moved to rule on decisions made by an employment tribunal and the Employment Appeal Tribunal against the former.
Mr Baillavoine was one of a number of employees who was dismissed by the administrators of the transferring company, Ultralon Holdings Ltd, prior to a TUPE transfer.
Baillavoine brought a claim against Ultralon’s eventual acquirer, SpaceRight Europe, alleging that he had been automatically unfairly dismissed for a reason “connected with the transfer”. Both the employment tribunal and EAT agreed with him, but Spaceright appealed.
However, the Court of Appeal has now ruled that as a matter of ordinary English and “plain common sense”, dismissal prior to a transfer could be considered a reason “connected with the transfer”, even if the new employer was unknown.
This meant that Baillavoine’s dismissal was automatically unfair and his claim was upheld.
