In the recent case of Tabberer and others v Mears, the Employment Appeal Tribunal (“EAT”) held that the removal of a contractual travel allowance following a TUPE transfer was not void. The EAT found that the allowance was removed because the management of Mears, the new employer, believed it was outdated and unjustified. This belief pre-existed the transfer and did not arise because of the TUPE transfer. The TUPE transfer was not the sole or principal reason for the removal of the allowance and so this contractual change was not void under TUPE.
The claimants in this case were a group of electricians. They had a contractual right to a travel allowance which had been in place since 1958. The purpose of the allowance was to compensate the electricians for loss of a productivity bonus when travelling to different depots. Over time, the depots were closed and the productivity bonus was phased out. The purpose of travel allowance was therefore redundant and now unjustified, but continued to be paid. In 2006, management questioned the payment of the allowance, but it was considered to be a legal requirement, so was continued.
The electricians transferred under TUPE to Mears Ltd and Mears ceased paying the allowance on the basis that it was no longer justified.
One of the principal aims of TUPE is the protection of employees’ terms and conditions following a transfer. Contractual variations are void under TUPE if the sole or principal reason for the variation is the transfer.
The electricians brought claims in the employment tribunal claiming that the removal of the allowance was void because the reason for the change was the TUPE transfer. The tribunal rejected these claims and found that the reason for the contractual variation was not the transfer but the fact that the allowance was outdated and unjustified. The electricians appealed to the EAT.
The EAT upheld the decision of the Tribunal and agreed that the contractual variation was not void under TUPE. It was relevant that management had questioned the allowance prior to the transfer as there was a pre-existing view that it was unjustified. The reason for the change post transfer was this pre-existing belief that the allowance was outdated and unjustified. The reason for the removal of the allowance was therefore not the transfer.
This case is a rare example of a contractual change after a TUPE transfer that is not void. Changes that are genuinely not due to the transfer, but to some other reason, will not be void. Care needs to be taken though with any contractual changes following a TUPE transfer. In particular, changes to contractual terms purely for the purposes of harmonisation of terms with other employees in the workforce after a TUPE transfer will always be void under TUPE.
It should be noted that TUPE does allow some changes to contractual terms post a transfer where the terms of the contract permit the employer to make a variation. This could apply, for example, in the case of a bonus scheme that specifically permits yearly amendments to targets or in the case of variations to insurance schemes, where the contract provides for such variations.