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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Spaceright Europe Ltd v Baillavoine & Anor [2011] EWCA Civ 1565 (14 December 2011)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2011/1565.html
Cite as: [2012] IRLR 111, [2012] 2 All ER 812, [2012] ICR 520, [2011] EWCA Civ 1565

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Neutral Citation Number: [2011] EWCA Civ 1565
Case No: A2/2011/0684

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
HHJ RICHARDSON
UKEAT/0339/10/SM

Royal Courts of Justice
Strand, London, WC2A 2LL
14/12/2011

B e f o r e :

LORD JUSTICE MUMMERY
LORD JUSTICE RICHARDS
and
SIR DAVID KEENE

____________________

Between:
SPACERIGHT EUROPE LIMITED
Appellant
- and -

(1)MR BRUNO BAILLAVOINE
(2) THE SECRETARY OF STATE FOR BUSINESS INNOVATION AND SKILLS
Respondent

____________________

MR GAVIN MANSFIELD and MS CHARLOTTE DAVIES (instructed by MBM Commercial LLP) for the Appellant
MR KEITH BRYANT and MR SAUL MARGO (instructed by Messrs Jeffrey Green Russell) for the First Respondent
Hearing date: 17th November 2011

____________________

HTML VERSION OF APPROVED JUDGMENT
LORD JUSTICE MUMMERY:
INTRODUCTION
____________________

Crown Copyright ©

  1. The claim is for automatic unfair dismissal. The appeal is about the construction and application of regulation 7(1) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). Some employees, including the claimant, were dismissed by the administrators of the transferor employer prior to a TUPE transfer. The dispute is whether the reason for the dismissal of the claimant was "connected with the transfer" so as to make the dismissal automatically unfair. The Court is faced with differences of approach by the Employment Appeal Tribunal (EAT) in a series of conflicting rulings since 1994 on the similarly worded regulation 8(1) in the previous manifestation of TUPE in 1981.
  2. The appeal is from the order of the Employment Appeal Tribunal (EAT) dated 4 February 2011 turning down an appeal by Spaceright Europe Limited (Spaceright), against the decision of the Employment Tribunal (ET) sent to the parties on 30 March 2010.
  3. The ET upheld a claim by Mr Bruno Baillavoine (the Claimant) for automatic unfair dismissal for a reason connected with a relevant transfer of his employer's undertaking. Spaceright was the transferee of the undertaking of Ultralon Holdings Limited of which the Claimant had been Chief Executive Officer from 3 September 2003 until it was put into administration on 23 May 2008.
  4. A stark statement of the sequence of relevant events in 2008 is sufficient to set the litigation scene.
  5. (1) On 23 May 2008 Utralon Holdings and its subsidiary Ultralon Limited went into administration. On the same day the administrators dismissed the Claimant along with 43 other employees. Both Ultralon companies subsequently went into liquidation.
    (2) On 25 June 2008 the administrators sold the business and assets of the Utralon companies to Spaceright.
  6. On the critical question the ET found that the reason for the dismissal of the Claimant (a) was connected with the relevant transfer and (b) was not a reason entailing changes to the workforce so that the defence of an economic, technical or organisational reason for the dismissal (ETO) in regulation 7(2) and (3) was unavailable to Spaceright.
  7. The administrators' dismissal of the Claimant was accordingly automatically unfair. Although Spaceright had not dismissed the Claimant, it is common ground that any liability for that unfair dismissal had passed to it under TUPE as the transferee of Ultralon's undertaking.
  8. Permission to appeal was granted by Rimer LJ on 4 May 2011 on the three grounds advanced by Spaceright:-
  9. (1) Perversity.
    The essence of the perversity challenge is that, in finding that the reason for the dismissal was connected with the transfer to Spaceright, the ET rejected, without giving reasons, the administrators' evidence pointing to a reason that was not connected with the transfer, namely an administration cost-saving reason.
    (2) Misinterpretation of TUPE.
    This ground is that the ET misdirected itself on the proper construction of regulation 7(1) relating to a reason "connected with the transfer" (my emphasis). The ET declined to follow the decision of the EAT in Ibex Trading v. Walton [1994] ICR 907. The EAT held in Ibex that, where administrators dismissed employees with the aim of making the insolvent business more saleable, it could not be said that the reason for the dismissal was connected with "the transfer" of the assets of the business effected some four months later, because, at the relevant date (the dismissal), there was only the possibility of a transfer. The particular relevant transfer that ultimately took place was neither in being nor in negotiation or in contemplation at the date of the dismissal. In short, there was not in existence, at the date of dismissal, an actual or prospective transfer for the dismissal reason to be connected with. Spaceright submits that the ET erred in law in (a) declining to follow Ibex and instead (b) following EAT decisions to the opposite effect in Harrison Bowden v. Bowden [1994] ICR 186 and Morris v.John Grose [1998] ICR 655.
    (3) Wrong approach to ETO defence.
    The final criticism is that the ET erred in its approach to the ETO defence. Although the EAT in fact agreed with Spaceright on this point, it went on to dismiss this ground of appeal because, on the ET's finding of facts, the correct application of the ETO defence led to the same result.

    TUPE

  10. TUPE implemented Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses. Article 4 provides that:-
  11. "1. The transfer of the undertaking, business or part of the undertaking or business shall not in itself constitute grounds for dismissal by the transferor or the transferee. This provision shall not stand in the way of dismissals that may take place for economic, technical or organisational reasons entailing changes in the workforce."
  12. Regulation 7 (Dismissal of employee because of relevant transfer) reflects the language of the Directive by providing that:
  13. "(1) Where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of Part X of the 1996 Act (unfair dismissal) as unfairly dismissed if the sole or principal reason for his dismissal is-
    (a) the transfer itself; or
    (b) a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce."
  14. As already noted regulation 7(1) is in similar terms to regulation 8(1) in the TUPE of 1981.
  15. ET decision

  16. In arriving at its conclusion that the Claimant should be treated as unfairly dismissed by the administrators the ET set out in paragraph 13 of its judgment its detailed findings of fact including a finding that:-
  17. "13.24 On 23 May administrators were appointed by the company's bankers Halifax Bank of Scotland: Mr Caven was one of the administrators. On the same day, the claimant was dismissed orally from his employment by Mr Caven. The administrators decided to continue trading the company's business with a view to selling it as a going concern. They dismissed a number of other employees. A letter was sent to the claimant at his former address, purporting to confirm the termination of his employment by Ultralon Limited. The claimant would not see a version of this letter sent to his true address until early July."
  18. The ET's judgment also recorded, in sub-paragraph 13.26, the following answer given by Mr Robert Caven of Grant Thornton in response to a written questionnaire from the Claimant's solicitors. (The ET did not consider it necessary for Mr Caven to give oral evidence at the hearing, or to make a witness statement).
  19. "The Claimant was employed as managing director of the company. This role became redundant on our appointment and given the high salary costs of the Claimant as compared to other employees, his role was identified as being one which the business could operate without and which would make significant cost savings. The Claimant was therefore made redundant on our appointment.
    The Claimant carried out a unique role so there was no selection criteria other than as mentioned above."
  20. Mr Caven explained that the administrators decided that the best way of achieving the objective of the administration was to attempt to sell the business as a going concern and that it was necessary to continue to trade the business while seeking offers from interested parties and to avoid a loss being incurred during this period. In a progress report on the administration dated 18 December 2008 Mr Caven explained that:-
  21. "We obtained funding from the Bank in order to continue to trade whilst we undertook a marketing exercise for the business of the Company."
  22. The ET's conclusions on the critical third question (i.e. the reason for the Claimant's dismissal and its connection with the transfer) were as follows:
  23. "17. The third question is: what was the reason for the claimant's dismissal? Was it a reason connected with the transfer that is not an economic, technical or organisational reason of the employer, entailing changes in the work force of the employer? We bear in mind what Mr Caven said in response to the claimant's questions. It seems to us that the claimant, as a Chief Executive Officer, was redundant because no purchaser of the businesses from the administrator would require such an officer. The purchaser would either be an existing company with its own chief executive officer or it would be a new venture, where the chief executive officer would come from the ranks of the directors. It was therefore necessary for the administrators to dispense with the claimant's services.
    18. We are faced with two authorities from 1994 which are to the contrary effect. In Ibex Trading the Employment Appeal Tribunal thought that whilst the employees were dismissed for a reason connected with a possible transfer, they had not been dismissed for a reason connected with the ultimate transfer of the business, which occurred some four months after the employees had been dismissed. In the Harrison Bowden case, the same tribunal held that dismissals could be for a reason connected with the transfer, even though no actual prospective transferee had been identified at the time of the dismissal. We prefer the reasoning in the Harrison Bowden case. It seems to us here that the claimant was dismissed so as to enable a purchaser of the business to acquire the business and assets without the continued employment of its Chief Executive Officer. The claimant's salary of £120,000 might also have presented a problem for a prospective purchaser of the business. For these reasons we are satisfied that the reason for the Claimant's dismissal was connected with the transfer of the business and assets of [Ultralon and Ultralon Holdings] to [Spaceright].
    19. The second part of the third question however is whether or not, since the reason for the claimant's dismissal is, as we have held, a reason connected with the transfer, that reason is an economic, technical or organisational reason entailing changes in the workforce of [Ultralon Holdings]. We think that the answer to this particular question is straightforward. The reason for the claimant's dismissal may well have been economic, at least in part. It could also be said to be an organisational reason. But it is clear that the reason does not entail changes in the workforce of [Ultralon Holdings]. [Utralon Holdings] was a holding company. It did not have a workforce. The claimant's pay was transmitted to him by means of a payroll operated for the purposes of [Ultralon]. Even if we were to include the workforce of [Ultralon] in our consideration of the reason for the dismissal it seems to us that the reason identified above does not entail changes in that workforce. The reason for the claimant's dismissal (see above paragraph 17) is peculiar to him and to his circumstances and does not apply to the wider workforce. It follows that regulation 7(1) applies. The reason for the claimant's dismissal was a reason connected with the subsequent transfer but it was not an economic technical or organisational reason entailing changes in the workforce of [Ultralon Holdings]. Accordingly, the claimant's dismissal by [Ultralon Holdings] was unfair."

    EAT decision

  24. In the excellent judgment prepared by HHJ Richardson the EAT dismissed Spaceright's appeal for a number of reasons.
  25. In the first place, the EAT concluded that the effect of Morris and later cases was effectively to settle the correct legal approach to the construction of Regulation 7(1) at the level of the EAT, that the ET was entirely correct to follow the approach in Harrison Bowden (and Morris) and that it would have been in error if it had followed Ibex.
  26. In the second place, the ET had not reached a perverse decision nor had it failed to give adequate reasons for its decision.
  27. "33. In this case the Tribunal correctly focussed on the reasons of the administrator. It took the statement of the administrator as its starting point. It was entitled to make findings which took into account the context and to draw on its own experience of employment issues. Mr Caven said that the appointment of the administrators rendered the Claimant redundant. It is true that the administrators had a right to manage the business prevailing over that of the chief executive or managing director, but if the business was to be transferred, which was what they contemplated, it would need a managing director. The Tribunal was entitled to consider why, given that a going concern would need a managing director, the administrators made the Claimant redundant. The conclusion they reached was entirely tenable. In our judgment it involves no error of law."
    "35. Nor do we accept Mr Lee's submission that the Tribunal needed to make more precise findings as to the likelihood of a transfer taking place. In this case there is no doubt that the administrator was contemplating a transfer at the time of dismissal and no reason to doubt that he had solid reasons for doing so. The transfer was effected the following month.
    36. Nor do we accept Mr Lee's submission that the Tribunal was bound, on the evidence, to find that the administrator dismissed the Claimant because the business could not afford his salary. As we have pointed out, it was part of the background that the bank funded the business while a transfer was sought. This, unlike some of the cases cited to us, was not a case where the financial exigencies left the administrator without choices.
    37. We accept that the Tribunal's reasoning is brief. This has to be seen against the background of the limited relevant evidence available to it. In our judgment the Tribunal's reasoning on this point sufficiently tells the parties and the Appeal Tribunal how the issue was decided."
  28. On the ETO reason point the parties agreed, and the EAT accepted, that the ET's reasoning was erroneous. The EAT did, however, accept the submission of counsel for the Claimant that, if the ET was entitled to reach the conclusion set out in paragraph 17 of its reasons (see above), it followed that the reason for dismissal was not an ETO reason entailing changes in the workforce. The relevant law concerning ETO reasons entailing changes in the workforce had been considered by the Court of Appeal in Berriman v Delabole Slate Ltd [1985] ICR 546 and Whitehouse v Chas A Blatchford & Sons Ltd [2000] ICR 542. The ETO reason is not available, if the reason relied on did not relate to the future conduct of the business as a going concern but related, for example, to bringing about a sale of the business at an enhanced price, or to changes in the identity of the individuals making up the workforce without affecting the overall numbers and functions of the employees as a whole.
  29. The EAT's conclusion on the ETO point was that:-
  30. "46. Applying those principles, it is in our judgment plain that the administrator's reason as found by the Tribunal in paragraph 17 of its reasons was not an ETO reason entailing changes in the workforce. The reason did not relate to the conduct of the business as a going concern; the business was always going to need a managing director. It did not contemplate a diminution in the number of employees in the ongoing business, for it was contemplated that the Claimant would be replaced (as indeed he was). The reason was related to the sale of the business."

    Spaceright's submissions

  31. Mr Gavin Mansfield, who did not appear in the ET or in the EAT, made three concise and clearly formulated submissions on behalf of Spaceright as to why the ET had erred in law in concluding that the Claimant's dismissal was automatically unfair.
  32. I. Perverse finding

  33. The first submission is that the ET's findings (a) that the reason for the Claimant's dismissal was to make the sale of the business more attractive to a potential purchaser and (b) that that reason was connected with the transfer to Spaceright were made in the face of evidence from the administrators clearly indicating a different reason unconnected with the transfer. Their evidence was rejected by the ET without explanation, without apparently appreciating that such an alternative non-transfer reason was being advanced and accordingly without evaluating it.
  34. The available evidence was that the administrators' reasons related to the urgent necessity for short-term costs-savings in the period while they were trading the business for an unknown period and retaining only those employees needed to operate the business. The Claimant's role was no longer necessary. The administrators were running the business. They would save significant costs by sacking him. The appointment of the administrators and their administration rendered the Claimant's role unnecessary while they were running the business as a going concern.
  35. Such a reason, it is contended , was not a reason "connected with" the transfer. It was connected with the conduct of the administration. The administrators' evidence of their reason for the dismissal was relevant, credible and cogent. The ET's conclusion in favour of a reason connected with the transfer to Spaceright was perverse.
  36. II.Erroneous interpretation of Article 7(1) and conflicting authorities

  37. The second submission is that the ET erred in its construction and application of Regulation 7(1), because the reason for the dismissal of the Claimant was not connected with the transfer of the undertaking on 25 June 2008. The most that the dismissal was connected with on 23 May was a possible transfer, as the identity of the transferee and the terms of the transfer were then not known.
  38. The administrators had dismissed the Claimant on the day of their appointment. Although they then wished to sell the business as a going concern, they had no particular transaction or purchaser in view at that date. They had not even begun to market the business. There was a real possibility that a buyer would not be found.
  39. The ET misdirected itself that the reason for dismissal could be "connected with" the relevant transfer to Spaceright on 25 June, even if no prospective transferee had been identified at the date of dismissal. It purported to follow a line of EAT authorities in Harrison Bowden and Morris (see above) and CAB Automotive Ltd v. Blake & Anor [2007] UKEAT/0298/07.
  40. In doing so it wrongly ignored Ibex in which the key passage on the construction of regulation 8(1) of the 1981 TUPE regulations stated at p 914F-H that:-
  41. "Contrary to what was said in Harrison Bowden …we attach significance to the definite article in regulation 8(1) [now 7(1)] ' that employee shall be treated …as unfairly dismissed if the transfer or a reason connected with it is the reason or principal reason for his dismissal.' The link, in terms of time, between the dismissals and the transfers will vary considerably. In Litster v Forth Dry Dock & Engineering Co. Ltd. [1989] ICR 341 the time difference was one hour; often it will be more. A transfer is not just a single event: it extends over a period of time culminating in a completion. However, here, the employees were dismissed before any offer had been made for the business. Whilst it could be properly said that they were dismissed for a reason connected with a possible transfer of the business, on the facts here we are not satisfied that they were dismissed by reason of the transfer or for a reason connected with the transfer. A transfer was, at the stage of the dismissal, a mere twinkle in the eye and might well never have occurred. We do not say that in every case it is necessary for the prospective transferee to be identified; because sometimes one purchaser drops out at the last minute and another purchaser replaces him."
  42. Spaceright's position is that the reasoning in Ibex covers this case and that the ET decision and the authorities on which it relied were based on a misinterpretation of the earlier regulation. The language of regulation 7(1) clearly requires the reason for the dismissal to be connected with the relevant transfer, that is, the transfer that actually takes place, and not justly vaguely associated with a possible transfer at some future date. It is argued that a dismissal with a view to making the business more saleable to a possible future purchaser is not, on the authority of Ibex, a dismissal for a reason connected with the transfer. On well settled principles of unfair dismissal law the ET must, in deciding the true reason for the dismissal, consider that set of facts known to the administrators that caused them to dismiss the Claimant.
  43. By focusing on the definite article in "the transfer" Mr Mansfield stresses that the reason for the dismissal must be connected with the particular transfer, which in due course took place. Within that framework the ET must make an evaluation of the causal connection between the reason for dismissal and the transfer. The ET erred by failing to assess the likelihood at the date of dismissal of a future transfer to Spaceright, or to any transferee. It did not therefore make essential findings about the nature of the connection of the dismissal on 23 May with the eventual transfer on 25 June. In this case Spaceright was nowhere to be seen on the transfer landscape at the date of the Claimant's dismissal.
  44. Instead of following the approach, as laid down in Ibex, the ET followed a different line of authority beginning with Harrison Bowden in which Tuckey J, giving the judgment of the EAT, rejected a submission that "the transfer" meant that there must, at the time of the dismissal, be a transfer in existence, or at least a prospective transferee. He said at 191B-C that that construction:-
  45. " …would open a loophole in this legislation which presumes continuity of employment and attempts to ensure the protection of workers when undertakings are transferred. There is also a conceptual difficulty in distinguishing between a prospective transferee and the actual transferee. Why should it make any difference if there is one front runner at the point of dismissal who is then perhaps, as the example was put to us, gazumped by another one but in the meantime the employees have been dismissed? If their dismissal was connected with the transfer one would expect this legislation to protect them."
  46. The judgment went on to refer to "the transfer" as being a reference to " 'a transfer' which actually takes place which these Regulations contemplate by the definition of 'the relevant transfer.' "
  47. Harrison Bowden was followed in Morris where Bell J said at p.666C-D:-
  48. "In our view, however, the words "the transfer" towards the end of regulation 8(1) do not by necessary construction have to refer to the relevant particular transfer which has actually taken place. If that was the necessary meaning of regulation 8(1) it could have been made quite clear by the use of words such as "that transfer" or "the particular transfer." Although "the" is described as a definite article, it is not always used as such in ordinary English, and in our view the words "the transfer," as they are used in regulation 8(1), could perfectly well mean "transfer" or "a transfer." In our judgment this view of the meaning of regulation 8(1) is more consistent with the broad scope of Directive (77/187/EEC)."
  49. In a later passage in the judgment p 667G he said:-
  50. "…In our judgment the tribunal should have asked whether a transfer to any transferee who might appear, or a reason connected with such a transfer was the reason or principal reason for his dismissal."
  51. Against that approach Mr Mansfield also cited the decision of this court in Amicus & Anor v. Dynamex [2009] ICR 511 where it was found by the ET that the administrator had to dismiss employees because the business was insolvent and there were no funds to pay them. It was also found by the ET that the dismissals had not been for a reason connected with the transfer and had been for an economic reason. An allegation of collusion between the administrators and the transferees was rejected by the ET.
  52. The EAT allowed appeals by the claimants. By a majority the Court of Appeal allowed the appeal by the transferee company from the EAT decision. As Ward LJ pointed out in paragraph [50], there was nothing to suggest in that case that the administrator had to dismiss staff in order to have a better prospect of selling the business. The ET had found that the administrator had dismissed the employees in spite of any transfer not with a view to effecting it. That finding destroyed any argument that the transfer had anything to do with the dismissals. In paragraph [73] Rimer LJ said that, as the ET repeated more than once in that case, the administrator made the dismissal decision exclusively on justifiable economic grounds, as the company had no money in the bank with which to pay the employees. The dismissal decision was made independently by the administrator in accordance with his duties and not collusively, or so as to enable him to transfer the undertaking to the transferee free of employment contracts. I note that the cases of Ibex, Harrison Bowden and Morris were not even cited to that court or referred to in the judgments. In my view, Amicus is clearly distinguishable from this case and I will say no more about it.
  53. III.ETO defence

  54. The third submission is that, as was accepted by the EAT, the ET erred in relation to the ETO reason in failing properly to apply the principles in Berriman v.Delabole Slate Ltd [1985] ICR 546 and Whitehouse v. Chas A Blatchford & Sons Ltd [2000] ICR 542.
  55. Having misdirected itself in law the ET failed properly to evaluate the evidence as to whether the reason for the dismissal was an ETO reason entailing changes in the workforce. Further, the EAT erred in holding that the available evidence indicated that the ET's decision was plainly right on the basis that no diminution in the number of employees was contemplated and that the Claimant would be replaced.
  56. The position was that the ET finding that the Claimant was made redundant entails a diminution in the need for workers of a particular kind and that entails a change in the workforce. The evidence was that the appointment of the administrators made the continuation of the Claimant's role unnecessary.
  57. Discussion and conclusions

  58. I will deal separately with each of Spaceright's grounds of appeal.
  59. I.Perversity

  60. The finding of the ET that is alleged to have been perverse was that the Claimant was dismissed for a reason designed to give the best prospect of selling the business as a going concern, rather than for a financial reason unconnected with any transfer of the business.
  61. This ground of appeal is hopeless, as there was evidence before the ET that the administrators decided to continue to trade with a view to selling the business as a going concern and that the Claimant was not considered important in the sale of the business.
  62. II. Interpretation

  63. In Ibex and in Mr Mansfield's submissions to this court the emphasis is on the effect of the definite article "the" in regulation 7(1) as requiring the particular transfer to be in contemplation at the time of dismissal for that dismissal to be "connected with" the transfer. In this case there is no finding that the administrators had the particular transfer in contemplation on 23 May 2008. There was no more than the possibility of a transfer. On that approach the dismissal could not be "connected with" the particular transfer on 25 June: it was neither in existence nor in contemplation at the date of the Claimant's dismissal on 23 May.
  64. In my judgment, the natural and ordinary meaning of the language of regulation 7(1) does not require a particular transfer or transferee to be in existence or in contemplation at the time of the dismissal.
  65. The exercise under regulation 7(1) only has to be carried out if there has been both a dismissal, which is claimed to be automatically unfair, and a relevant transfer. If, on the one hand, no relevant transfer ever takes place, there is no basis for making a claim for automatic unfair dismissal for a transfer-related reason. The regulation would simply not be engaged.
  66. If, on the other hand, a dismissal and a relevant transfer do take place, the regulation could be engaged. The ET is then required by the regulation to look to the fact of dismissal and, as a matter of the objective assessment of the evidence, to determine the reason for it and whether that reason was "connected with" the transfer. As a matter of ordinary English and of plain common sense a dismissal prior to the transfer could have been for a reason "connected with the transfer", even though that particular transfer or transferee was not known, identified or contemplated at the date of dismissal. It is a common experience of life that an event (A) may sensibly be considered to be "connected with" a later event (B), even though it was not known, contemplated or foreseen at the time of event (A) that event (B) would happen. This approach gives straightforward effect to the words "the transfer" in regulation 7(1), rather than requiring the substitution of other words such as "transfer" simpliciter, or "a transfer", or "any transfer." It puts the weight of the analysis instead on the breadth of the words "connected with." Subject to that possible difference in analysis, however, the approach is the same as that in Harrison Bowden and Morris which , as Beatson J said in CAB Automotive at paragraph 32, is more consistent than that in Ibex's case with the broad scope of the Directive which TUPE implements.
  67. The issue for the ET under regulation 7(1) was whether it could properly conclude, on the evidence available and using the industrial experience of its members, that the dismissal of the Claimant was "connected with" the relevant transfer. The ET held that it was. There was evidence for that finding. The administrators achieved within four weeks or so what they set out to achieve. In reaching its conclusion the ET made no error of law.
  68. III.ETO

  69. I agree with the ET and the EAT that the Claimant was not dismissed for an ETO reason. For an ETO reason to be available there must be an intention to change the workforce and to continue to conduct the business, as distinct from the purpose of selling it. It is not available in the case of dismissing an employee to enable the administrators to make the business of the Company a more attractive proposition to prospective transferees of a going concern.
  70. Result

  71. I would dismiss the appeal. No case has been made out that the decision of the ET was wrong in law either on the ground of perversity, or as a matter of the construction and application of regulation 7(1). The dismissal of the Claimant was for a transfer-connected reason and was automatically unfair. By reason of the relevant transfer and TUPE Spaceright is liable for that dismissal.
  72. On a more general level I should make it clear that, in my judgment, the approach of the EAT in Harrison Bowden and Morris (see above) is to be preferred to that in Ibex. The approach followed in those two cases is more consistent than the approach in Ibex with (a) the broad purpose of the Directive and TUPE to protect employment in the event of the transfer of an undertaking and (b) the natural and ordinary meaning and effect of the language of regulation 7(1). In future the ET and the EAT should follow the approach towards regulation 7(1) in Harrison Bowden and Morris, as approved by this Court.
  73. Lord Justice Richards:

  74. I agree.
  75. Sir David Keene :

  76. I also agree.


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