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TUPE: two years' service needed for unfair dismissal claim
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MRS Environmental Services Limited v Marsh and Harvey (Court of Appeal 9 July 1996)
The Court of Appeal has decided that employees dismissed in connection with a transfer of an undertaking must have 2 years' service before they can bring a claim for unfair dismissal. In the case of MRS Environmental Services Limited v Marsh and Harvey, in which Thompsons were instructed by the GMB, the Court of Appeal reversed the 1995 decision of the Employment Appeal Tribunal in Milligan and Bailey v Securicor.
Fortunately the court's decision has limited significance and only applies to employees dismissed before 26 October 1995 because the Government passed a new law on 26 October 1995 requiring all employees to have 2 years' service before bringing claims on a transfer related dismissal.
Marsh and Harvey were employed in Castle Point Borough Council's housing maintenance Direct Service Organisation, which was contracted out to MRS Environmental Services. Only dismissed employees with more than 2 years' service were paid compensation by MRS.
The issue in the Court of Appeal revolved around Regulation 8(1) of the TUPE Regulations. This says that where an employee is dismissed for a reason connected with a transfer "that employee shall be treated for the purposes of Part V of the Employment Protection (Consolidation) Act 1978 as unfairly dismissed".
Thompsons argued that this meant the employee should be treated as unfairly dismissed without the need to establish a qualifying period. We also argued that European law gave an absolute right not to be unfairly dismissed and that right could only be limited if the UK legislation expressly excluded specific categories of employee.
The Court of Appeal accepted the contractor's argument that all the provisions of Part V must be satisfied and employees only had a right to claim unfair dismissal if they had the necessary 2 years' qualifying service.
The Court of Appeal's decision is flawed in a number of respects. The Court said that if the intention of the TUPE regulations was that employees need not have 2 years' service to bring a claim for a TUPE dismissal, the law would have said so. The court did not take fully on board the distinction between the Trade Union dismissals legislation which says that where an employee is dismissed for Trade Union reasons "the dismissal should be regarded as unfair" whereas TUPE states that the "employee shall be treated as unfairly dismissed".
Treating the dismissal as unfair means that each employee would still have to satisfy the other requirements, including qualifying service, unless specific provision was made. In contrast, stating that the employee shall be regarded as unfairly dismissed means that the employee is treated as having satisfied all requirements for unfair dismissal, leaving only remedies to be decided. This is supported by comments in the leading judgment in the House of Lords' decision of Litster (1990).
The Court of Appeal failed to deal adequately with the implications of Regulation 13 of the TUPE Regulations. This provides that the unfair dismissal provisions in TUPE do not apply where the employee ordinarily works outside the UK. If the Court of Appeal's interpretation of TUPE was correct, why have this provision? Employees who ordinarily worked outside the UK would not have a right to claim unfair dismissal in any event.