When an employee’s contract of employment transfers to a new employer following a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), any variation of the contract that is made after the transfer is void if the sole or principal reason for it is the transfer itself (TUPE Regulation 4(4)). Case law has established that there is no set time limit between a TUPE transfer and a variation of the contract of a transferred employee beyond which the variation ceases to be by reason of the transfer, but the longer after the transfer it occurs, the less likely it is to be connected. The approach when determining the reason for the variation is essentially one of fact.
In Smith and others v Trustees of Brooklands College, Mrs Smith and three colleagues had been employed as part-time teaching assistants by Spelthorne College. The agreement regarding their pay was that this was calculated on a pro-rata basis with reference to a full-time employee working 25 hours a week, not 36 hours a week as was usual. The arrangement was not standard practice and did not correspond with the guidance that applied elsewhere in the education sector.
In August 2007, Spelthorne College merged with Brooklands College in a transfer under TUPE. Some time later, Ms Hopkins, the HR Director of the now merged colleges, discovered the discrepancy with regard to the pay calculation of the four teaching assistants who had transferred from Spelthorne. She thought there had been a mistake and took steps to rectify it. Eventually, in January 2010, Mrs Smith and her colleagues reluctantly agreed to a reduction in their pay to bring it into line with other similar workers and their contracts of employment were varied accordingly.
The four employees claimed that the variation to their contracts of employment was unlawful because the reason for it was the TUPE transfer. The Employment Tribunal (ET) found, however, that the real reason for Ms Hopkins’ decision to alter the contracts was her belief that the employees had been mistakenly paid at a rate that was not in line with the rest of the sector. The decision was unconnected with the transfer and the agreed contract variations were not therefore void. The employees took their fight to the Employment Appeal Tribunal (EAT).
The EAT dismissed the appeal. Whilst it could be said that ‘but for’ the transfer to Brooklands the employees’ level of pay would not have been altered, that is not the correct test in such cases. The correct test is to ask what was the real reason for the contract variation. The ET was entitled to reach the decision it had based on the facts of the case. It had taken into account the amount of time that had elapsed since the transfer and had assessed what was in Ms Hopkins’ mind when she made the decision to vary the contracts. Although she was wrong in her assumption that there had been a mistake with regard to the employees’ pay, there was no doubt as to what her reason was.