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05 November 2018

127: Removal of outdated contractual travel allowance was not connected to TUPE transfer

Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), changes to employees’ contracts of employment will be void if the sole or main reason for the change is the transfer. In Tabberer v Mears Ltd, the Employment Appeal Tribunal (the EAT) considered whether unilaterally removing a contractual travel time allowance which had existed since 1958 but no longer served any purpose was void under TUPE.

The claimants in this case were electricians, originally employed by Birmingham City Council, who worked on maintenance of social housing. Since 1958 they had received an Electricians’ Travel Time Allowance (ETTA) which compensated them for the loss of a productivity bonus caused by the need to travel to many different depots. Over time, productivity bonuses were phased out and most depots were closed, leaving only one in operation at the time of the claim. The electricians nevertheless continued to be paid the ETTA throughout various TUPE transfers until their transfer to Mears Ltd in 2008. Mears then stopped the allowance on the basis that the electricians no longer met the eligibility criteria. Some of the electricians brought a successful claim alleging that this constituted an unlawful deduction from their wages. Mears subsequently gave notice that from September 2012, the ETTA would cease to be a contractual entitlement.

The employees brought further claims, arguing that this variation was void under TUPE. These arguments were rejected by the Employment Tribunal, which held that the reason for the contractual variation was not the transfer to Mears Ltd, but the fact that the ETTA was an outdated and unjustified allowance.

On appeal, the EAT agreed with the Tribunal’s findings. Although the company had to deal with the ETTA at the time of the 2008 TUPE transfer, it was an issue that would have confronted management regardless of any transfer. It was relevant that, prior to 2008, managers had already concluded that the ETTA was outdated and unjustified but had continued to pay it. This was therefore a pre-existing belief. Removing the ETTA in order to be fair to all job groups was also an issue which arose regardless of the transfer. The Tribunal had correctly concluded that the variation was not for a reason connected with the transfer.

This is a useful example of a permitted change to terms and conditions after a TUPE transfer. In this case, it was clear that the reason for the contractual variation was not the transfer, and that this reason would have applied regardless of the transfer. It was not motivated by a desire to harmonise terms and conditions, as is often the case, but to remove the unfairness caused by one group of staff receiving an outdated allowance. This illustrates that Tribunals will look at the wider context when establishing the reason for the change and what caused the employer to act as it did.

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