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Legal Updates

The scope of an "ETO"reason

13 August 2010 #Employment

Under TUPE, any dismissal or change to terms and conditions of employment which is connected with a relevant transfer is unfair or invalid, unless it can be shown that the dismissal or change was for an economic, technical or organisational reason entailing a change in the workforce (an "ETO" reason).

In the case of Nationwide Building Society v Benn & Others [2010], Mr Benn and a number of his colleagues were employed by the Portman Building Society until their employment was transferred to Nationwide under TUPE.

The employees believed that the Nationwide had altered their terms and conditions of employment to their detriment after the transfer, including a reduction in their skills and responsibilities and the application of a less generous bonus scheme.  Consequently, Mr Benn and his colleagues resigned and brought claims of unfair constructive dismissal.  

The EAT upheld the Tribunal`s decision that the employees had been constructively dismissed.  However, the tribunal and EAT agreed that the reason for the dismissal was an ETO reason (in this case that the change to the roles and the resignation of the employees was Nationwide`s narrower product range) and therefore the dismissal was at first sight "fair".  

That being said, the Tribunal went on to find that the dismissal was nonetheless unfair (procedurally) because Nationwide had failed to inform and consult employee representatives.  As an alleged breach of the duty to inform and consult had not been raised by the parties in argument, the EAT allowed an appeal by Nationwide and the case has been passed back to the tribunal to determine the question as to whether the dismissals were in fact unfair. 

Interestingly, the EAT held that an employer`s defence to an unfair dismissal claim based on the fact that changes to employment were for an ETO reason does not require that the organisational reason must entail changes to the whole workforce (in this case, the changes only affected a body of transferring employees).

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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