TUPE or Redundancy?

Photo by Ian Tormo on Unsplash

Readers of this blog will know that TUPE and redundancy are two employment law issues which have featured regularly in the last month or so.

So, today, we have a story which combines both.

Jobs lost as courier SGM Distribution goes into liquidation

SGM Distribution, a courier company, based in North-East Scotland (Aberdeen and Letham to be precise) has gone into liquidation. Thankfully, 51 of the DGM employees have had their employment transferred to another employer. These fortunate individuals will, of course, have their core terms and conditions of employment protected by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended).

Sadly, 16 of DGM’s employees will be having their employment terminated by reason of redundancy. Redundancy is a potentially fair reason for dismissal in terms of Section 98(2)(c) of the Employment Rights Act 1996 – assuming that such an exercise has been carried out properly by the employer.

The definition of redundancy is contained in Section 139(1) of the Employment Rights Act 1996:

“For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to—

(a) the fact that his employer has ceased or intends to cease—

(i) to carry on the business for the purposes of which the employee was employed by him, or

(ii) to carry on that business in the place where the employee was so employed, or

(b) the fact that the requirements of that business—

(i) for employees to carry out work of a particular kind, or

(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer,

have ceased or diminished or are expected to cease or diminish.“

Conclusion

Those former DGM employees unlucky enough to be made redundant are having their contracts terminated. On the other hand, the vast majority of the former DGM employees will maintain their continuity of employment (on their existing terms and conditions) with their new employer. They have a right not to experience any detriments to their terms and conditions of employment as a result of this transfer of an undertaking. Entirely positive changes to their contracts e.g increased pay, holiday entitlement, flexible working arrangements and enhanced family friendly working benefits would be most welcome. In terms of the TUPE Regulations, the new employer has limited scope for implementing negative changes to the employment contracts of the transferred employees. Any attempted changes must be for economic, technical or organisational reasons – not an especially profitable area for employers.

Postscript

Just when you find one story about the implications of TUPE or redundancy, another pops up. Please see a link to a relevant story from BBC Northern Ireland involving the Canadian company, Bombardier:

Bombardier to sell NI operations

Copyright Seán J Crossan, 2 May 2019