Spaceright Europe Ltd v Baillavoine and another EAT February 2011
A former CEO of a company was dismissed on the day that the company was put into administration. The reason for this was to enable the purchaser to acquire the business without maintaining the employment of the CEO. After a month, the company was sold, the sale constituted a TUPE transfer. The former CEO claimed automatically unfair dismissal, due to the dismissal happening because of the transfer. Spaceright held that the reason was an ETO reason.
The Employment Appeal Tribunal held that the dismissal was unfair and that there was no economic, technical or organisational reason for this. Furthermore, there was a continuing need for that role, as the CEO was replaced by another employee.
- If the main reason for a dismissal is a transfer, or a reason connected with it, then it will be automatically unfair under Regulation 7 (1) of the Transfer of Undertakings (Protection) Regulations 2006 (TUPE).
- Companies can be fined up to 13 weeks’ pay as compensation to the employee in question.
- It is essential that professional advice is sought in a TUPE situation, to assess whether it applies and instruct the employer of the consultation period that has to take place.