London United Busways Limited v V De Marchi & Anor

‘4.— Effect of relevant transfer on contracts of employment

Except where objection is made under paragraph (7), a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer, but any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee.

Without prejudice to paragraph (1), but subject to …, on the completion of a relevant transfer —

...

Paragraphs (1) and (2) shall not operate to transfer the contract of employment and the rights, powers, duties and liabilities under or in connection with it of an employee who informs the transferor or the transferee that he objects to becoming employed by the transferee.

Subject to paragraphs (9) and (11), where an employee so objects, the relevant transfer shall operate so as to terminate his contract of employment with the transferor but he shall not be treated, for any purpose, as having been dismissed by the transferor.

Subject to regulation 9, where a relevant transfer involves or would involve a substantial change in working conditions to the material detriment of a person whose contract of employment is or would be transferred under paragraph (1), such an employee may treat the contract of employment as having been terminated, and the employee shall be treated for any purpose as having been dismissed by the employer.

No damages shall be payable by an employer as a result of a dismissal falling within paragraph (9) in respect of any failure by the employer to pay wages to an employee in respect of a notice period which the employee has failed to work.

Paragraphs (1), (7), (8) and (9) are without prejudice to any right of an employee arising apart from these Regulations to terminate his contract of employment without notice in acceptance of a repudiatory breach of contract by his employer.’

‘Findings of Fact

The Claimant was employed as a bus driver by the First Respondent from 7 January 2003. He commenced his employment at the First Respondent’s Shepherds Bush garage, and in August 2003 moved to the Stamford Brook garage, which is approximately a 15-minute walk from his home. He walked to and from work. He does not own a car.

The Claimant’s contract of employment contained the following term in relation to his place of work (my emphasis):

The First Respondent operates 8 garages across London, some are [a] considerable distance away from the Stamford Brook garage.

For approximately the last 4 years of his employment with the First Respondent the Claimant drove a bus on the route 27. He worked 5 days a week, typically starting between 4.30pm and 5.15pm and finishing between 1.30am and 2am.

Transport for London (TfL) frequently re-tender bus routes. As a result of one of such re-tendering exercises in 2019, the First Respondent lost the contract for operating the route 27 to the Second Respondent. That was announced to all staff of the First Respondent on 25 March 2019.

It was accepted by the First and the Second Respondent that the transfer of the cont[r]act would be “a relevant transfer” for the purposes of TUPE and that all drivers (53 day drivers and 6 night drivers) assigned to the route 27 would transfer under TUPE to the Second Respondent, unless they object[ed]. In preparing for the transfer, the First and the Second Respondent applied the TfL TUPE Guidelines of January 2016, which is a non-legally binding “best practice” guidance for transport operators on TUPE transfers.

In July 2019, the First Respondent engaged in TUPE consultations with its recognised trade union, Unite the Union. I[t] appears that initially the union disputed that TUPE would apply, however, shortly thereafter accepted that it would.

In or around June - July 2019, the Claimant learned that his route was going to transfer to the Second Respondent and would be operated out of the Second Respondent’s Battersea garage.

During August 2019, the First Respondent held “drop-in” meetings with affected drivers to discuss the transfer and explain options available to them. The options were:

The “drop-in” meetings were arranged for 12, 14, 19 and 21 August 2019, and the drivers were invited to attend the meetings alone or with a workplace colleague or a trade union representative.

On 16 August 2019, the Claimant together with his union representative, Mr John Reid, attended a meeting with Ms Rahman. The meeting was arranged to discuss the Claimant’s grievance unconnected with the TUPE transfer. However, Ms Rahman used that opportunity to also tell the Claimant about the transfer and the three options available to him.

At the meeting, having explained the three options, Ms Rahman asked the Claimant if he had any questions and he said that he did not. She gave him a letter explaining the three options and a preference form, which she asked the Claimant to fill in and return by 6 September 2019. The Claimant asked whether redundancy was an option and Ms Rahman said that it was not.

Mr Reid, being a representative of the RMT Trade Union, which the Claimant was a member of, but which was not recognised by the First Respondent for the purposes of collective bargaining or TUPE consultations, did not wish to discuss the options at the meeting. His view was that these matters [lay] outside his role at the meeting, and the meeting itself had been arranged to discuss the Claimant’s grievance and it was not a “drop-in” meeting to discuss the TUPE transfer.

On 19 August 2019, the Second Respondent wrote to the affected drivers explaining that with effect from 9 November 2019 their contracts would transfer to the Second Respondent under TUPE on the existing terms, including with its letter a FAQs document, which, inter alia, contained the following FAQs:

The Claimant saw the Second Respondent’s letter and the FAQs document on the announcement wall in the Stamford Brook garage.

On 21 August 2019, Ms Rahman wrote to the Claimant reminding him of the three options and asking him to return the preference form by 6 September 2019. The letter said that if the preference form were not received by that date, the First Respondent would assume that the Claimant wished to transfer to the Second Respondent with the route. The preference form, the First Respondent’s proposed new contract, with changes highlighted, the Second Respondent’s welcome letter and its “measures” letter were included with the letter.

On 5 September 2019, the Claimant emailed his trade union representatives his draft response to the First Respondent on the three options. The essence of his position was that the transfer was not suitable for him because of the additional travel time to the Battersea garage, the proposed new contract was not in his interest to sign because of the increase in the TOD, no guarantee of a minimum work and a reduction in the paid meal break time, resignation was not an option either - “definitely no”. Therefore, his view was that the only option left for him was redundancy, which he wished to formally request.

On 6 September 2019, the Claimant sent an email to Ms Rahman essentially on the same terms as in his draft to his union representatives. The letter read (my emphasis):

“Tupe option, going with the route 27 to Abellio and keeping my original contract. this is not an option for me because it will disrupt my life, over 1 hour longer traveling to work and an extra hour returning from work, this will add to fatigue and tiredness extending my working day by at least 2 hours, that is at least 10 hours per week, i have been at Stamford brook garage for 18 years and i live 15 minutes walk away, the reason for my original application was for the locality of the job, there fore i reject this option of Tupe as unsuitable for me.

...

not signing the contract does not mean I agree to Tupe, I do not agree to Tupe as stated above

after a lot of consideration the conclusion that i have come to is

1)

Tupe with the 27 route is not suitable for me.

2)

It is not in my best interests to sign the new contract.

3)

Resignation is not an option definitely no.

4)

I stand on my original contract there fore the only option left for me is redundancy.

5)

I Vittorino De Marchi hereby formally request redundancy.”

On 10 September 2019, Ms Rahman responded to the Claimant saying that she wanted to arrange a meeting with him to discuss his letter and asking if he wished his union representative to attend.

There was some confusion with arranging a meeting because there were other meetings planned to discuss the Claimant’s grievance and his safety concerns related to a particular bus model he was required to drive. These were separate matters unconnected with the TUPE transfer.

On 4 October 2019, Ms Knight, HR Business Partner of the First Respondent, wrote to the Claimant explaining the three options available to him and reiterating that redundancy was not one of them because his job did “not cease to exist.” The letter went on to say (my emphasis):

On 4 October 2019, the Claimant went on a self-certified sick leave until 6 October 2019 due to stress, which he says was caused by the First Respondent’s letter of 4 October 2019.

On 8 October 2019, the Claimant emailed Ms Knight. His email was largely in relation to his grievance, safety concerns and what he perceived as the company ignoring his requests and not answering his questions. However, in that email he again stated that he could not accept the transfer (“i gave you reasons that i can not except (sic) TUPE”).

There were further attempts to arrange a meeting with the Claimant. On 11 October 2019, the Claimant emailed Ms Knight saying that he did not wish to have a meeting with Ms Rahman. There were further email exchanges with the Claimant to arrange a meeting with Ms Knight upon her return from holidays.

In the course of that correspondence, on 23 October 2019, the Claimant wrote to Ms Knight and Mrs Biddle (the First Respondent’s Staff Manager) stating again that he had not accepted the TUPE transfer (“also I would like to remind you that I have not excepted (sic) your proposal of Tupe and gave you the reasons why it's not suitable for me”) and that he did not wish to enter into the new contract with the First Respondent, but that should [not] be taken as him agreeing to transfer under TUPE to the Second Respondent (“not agreeing does not constitute agreeing to Tupe”). He said that in the circumstances he considered that redundancy was “fair” and that he would accept it.

On 5 November 2019, the Claimant eventually met with Ms Knight. He was accompanied by Mr Reid. At the meeting, the three options were discussed, and the Claimant was told again that redundancy was not available. On the same day, following the meeting, Ms Knight wrote to the Claimant confirming the discussion and the available options. The letter stated (my emphasis):

“As you do not wish to accept the alternative employment or resign from your current employment, your employment will transfer with the route 27 to Abellio on 9 November 2019. Please note that this means that 8 November 2019 will be your last day of employment with London United. Please note that Abellio will be informed that you will be transferring with the route.”

On 06 November 2019, the Claimant self-certified himself as being off sick from 7 November 201[9] due to anxiety.

On 7 November 2019, Ms Knight sent the Claimant a further letter by email, in which she appears to have changed the First Respondent’s position on the Claimant’s employment status as follows (my emphasis):

“You objected to transfer in writing on 6 September 2019 despite further correspondence and our meeting you[r] stance remains the same. Under the TUPE Regulations to object to the transfer means that your employment will end on the transfer date by reason of your objection. You would not be treated to have been dismissed and would have no right to notice pay or redundancy pay. In effect, it is like an immediate resignation. I hope that this makes the position clear and I would like to take the opportunity to thank you for your service at the Company.”

On 8 November 2019, Mrs Biddle sent the Claimant a letter referring to Ms Knight’s email of 7 November 2019 and confirming that his employment would end on that day, 8 November 2019 by reason of his resignation (my emphasis).

“I write following the letter sent to you from Ngoma Knight, HR Business Partner dated 7th November regarding your employment with the company. I can confirm, as stated in the letter, that your employment will end today, 8th November 2019 by way of reason of immediate resignation.

Your final payment will be made on Friday 15th November 2019. Your P45 will be sent to you in due course and you will be paid the following amounts:

(a)

All pay up to and including the effective date of termination of your employment

(b)

Accrued holiday pay of 2 days.”

On 8 November 2019 at 13:54, the Claimant replied to Ms Knight by email stating that he had not resigned and did not wish to resign. He also reiterated that TUPE was not suitable for him and that he did not wish to sign the new contract for the reasons he had stated before.

On 8 November 2019 at 14:11, Ms Knight replied as follows (my emphasis):

“Thank you for your email. I note that you have confirmed that you have not resigned and you do not wish to accept the alternative employment we have offered you. I have therefore informed Abellio that you will be transferring with the route tomorrow. Please note that this now closes this matter.”

On 8 November 2019 at 15:24, the Claimant replied to Ms Knight’s email again stating that he had not resigned and would not sign the new contract and he would not transfer under TUPE with the route. He said that he was expecting redundancy and would not resign. He also said that he was on sick leave and was expecting to receive sick pay.

On 9 November 2019, the drivers assigned to the route 27, and who had not objected to the transfer, transferred from the First Respondent to the Second Respondent under TUPE.

On 11 November 2019, the Claimant was signed off sick by his GP for two weeks, until 24 November 2019, due to anxiety and depression. He sent the sickness certificate to the First Respondent, which Ms Knight forwarded to the Second Respondent, and by email of 12 November 2019 advised the Claimant to contact Ms Debbie McDonnell, HR Manager of the Second Respondent for any future correspondence. In that email she also wished the Claimant well with his “employment with Abellio”.

On 13 November 2019, Ms McDonnell sent the Claimant a welcome letter, acknowledging that he was off sick and inviting him to contact his new manager to discuss return to work, induction, and any required training. She asked the Claimant to provide his bank account details to set up his payroll and process his sickness payments.

On 22 November 2019, the Claimant telephoned Ms McDonnell and told her that he had objected to the TUPE transfer to the Second Respondent. On the same day he sent Ms McDonnell an email confirming that.

On 25 November 2019, the Claimant’s sick leave was extended until 1 December 2019.

On 27 November 2019, Ms McDonnell sent the Claimant a letter confirming that he had not transferred to the Second Respondent, enclosing his P45 showing his leaving date as 10 November 2019.

That communication was followed by email exchanges between Ms McDonnell and Ms Knight regarding the employment status of the Claimant. The First Respondent’s position was the Claimant’s employment had transferred to the Second Respondent because he had refused to accept the new contract and had confirmed that he was not resigning, and therefore “the default position” was that his contract of employment had transferred to the Second Respondent under TUPE. The Second Respondent’s position was that because the Claimant had objected to the transfer of his employment to the Second Respondent, his employment did not transfer by operation of TUPE and the fact that he had refused to resign was irrelevant.

On 28 November 2019, the Claimant emailed his sickness certificates to the First Respondent asking for sick pay. Ms Knight replied saying that she was forwarding them to the Second Respondent as the Claimant’s employer and re-stating the First Respondent’s position in the following terms:

“As you rejected our offer to stay with London United on alternative employment and also objected to the option of resigning rather than transferring via TUPE, your employment transferred via TUPE to Abellio with the route 27.”

The Claimant replied, copying Ms Rahman, Mrs Biddle, his union representatives and Ms McDonnell, reiterating his position that he had rejected the TUPE transfer and the new contract.

On 30 November 2019, Ms Knight emailed the Claimant setting out the First Respondent’s position that the Claimant’s employment had transferred to the Second Respondent under TUPE on 9 November 2019 and stating that the First Respondent would not correspond further on this matter.

On 2 December 2019, Ms McDonnell emailed the Claimant telling him that the Second Respondent was still liaising with the First Respondent on his matter and asking the Claimant to provide some further documents. Having not received a reply, on 30 December 2019, Ms McDonnell sent a reminder. The Claimant did not reply. His evidence, which I accept, are that the reason for him not replying was because he did not consider himself employed by the Second Respondent.

In early December 2019, the Claimant started to look for another job and attended job interviews for a bus driver position on 6 and 9 December 2019. The positions were at the Westbourne garage and in Willesden. He was unsuccessful.

On 13 January 2020, Ms McDonnell sent the Claimant a letter inviting the Claimant to attend a meeting to discuss his employment. In her letter, Ms McDonnell explained that because redundancy was not an option offered by the First Respondent, “the default position [was] that [the Claimant] [had] transferred employment to Abellio London bus automatically on 9 November 2019 with Route 27”. She asked the Claimant to attend a meeting on 28 January 2020 to discuss his return to work with his manager. The letter stated:

“Please note, that should we not hear from you, or should you decide not attend the meeting, you will be considered absent without authorisation and we will write to you under these terms thereafter.”

The Claimant did not reply to this letter. His evidence [is] that he did not receive that letter or the Second Respondent’s letter of 3 February 2020 because both had a wrong address: 21 Ellesmere Road, Chiswick, London W4 4QJ, and the Claimant’s correct address is: 21 Ellesmere Court, Ellesmere Road, Chiswick London W4 4QJ.

I do not accept his evidence on that matter. He admitted receiving the Second Respondent’s letter of 13 November 2019 and P45. Both had the same “wrong address”. He also admitted receiving the First Respondent’s letters of 5, 7 and 8 November 2019, which all had the same “wrong address”. W4 4QJ is the correct post code for the Claimant’s “correct address”[.] 21 Ellesmere Road, Chiswick, London has a different post code – W4 3DU.

Therefore, on the balance of probabilities, I find that the Claimant did receive the Second Respondent’s letters of 13 January 2020 and 3 February 2020. I accept that he might have chosen not to open and read them.

On 3 February 2020, the Second Respondent wrote to the Claimant stating that because he had failed to attend the meeting or otherwise engage with the company the decision had been taken to terminate the Claimant’s employment. The letter informed the Claimant that he had the right to appeal the decision. Applying “the ordinary course of post” rule, the letter should be deemed to have been received by the Claimant on the second business day – 5 February 2020. The Claimant did not reply to the letter.

Commuting distance between the Claimant’s home and the Battersea garage

The Claimant’s average commute times from home to the Battersea garage and back, based on his usual work schedule (starting between 4.30pm and 5.15pm and finishing between 1.30am and 2am), would have been:

‘128. I agree with the Respondents’ submissions. In my judgment, the Claimant was clear in his words and acts that he did not wish his contract to end, he did not terminate it himself and did not treat it as having been terminated. The fact that he did not attend work after the transfer, in my judgment, is not inconsistent with him not treating his contract as having been terminated. He was off sick until early December 2019. He, however, continued to submit his sick notes and demand sick pay from the First Respondent. I do not accept Ms Price[’s] argument that the Claimant’s “counter-offer” in any way shows that he treated the contract as having been terminated. On the contrary, he was trying to negotiate an acceptable termination of the contract while being at pains to keep it “alive”, because he knew or was so advised that by walking away from the contract, he would be significantly reducing his chances of getting redundancy. For these reasons, I find that he did not treat his contract as having been terminated.’

‘131. In my view, there are four possible answers to this question:

Both Respondents argue that once the transfer had taken place, the Claimant’s employment ended by reason of Regulation 4(8), which shall be considered as “deemed resignation”, and it was legally impossible for the Claimant to object to the transfer and maintain his employment contract alive.

Mr Bailey, for the First Respondent, argues that an employee who objects to the transfer but fails to resign has no remedy, because a claim under Regulation 4(9) can only take place where the Claimant has treated the contract as having ended prior [to] it ending under Regulation 4(8).

Ms Cummings for the Second Respondent agrees and further submits that “any conduct of the Claimant after 9th November 2019 on which the Claimant might seek to rely as demonstrating he treated his contract of employment with the First Respondent as having been terminated is irrelevant. By that stage, the Claimant’s employment had terminated by virtue of Reg 4(8)”.

Ms Price, for the Claimant, argues that Regulation 4(9) give[s] the employee a choice to treat his contract as having been terminated or not, and if the employee choosing not to treat the contract as having been terminated has the effect of the employee losing the protection afforded by Regulation 4(9) that would undermine the whole purpose of the regulation.

In my judgment, the answer (a) cannot be correct because it makes the words “may treat the contract of employment as having been terminated” devo[id] of any meaning (my emphasis). If the effect of the employee objecting to the transfer on the established grounds under Regulation 4(9) were to have the same effect, i.e. him being treated as having been dismissed, irrespective of whether he chooses to treat his contract as having been terminated or not, the words “may treat the contract of employment as having been terminated” would be superfluous. I note that these words were not in the previous version of the TUPE regulations and were included in the 2006 version to bring it in line with the EU Acquired Rights Directive (No 2001/23) and the European Court of Justice judgment in Merckx and anor v Ford Motors Co (Belgium) SA 1997 ICR 352, ECJ.

I find that the answer (b) is ought to be wrong too. The operation of Regulation 4(8) is “subject to” Regulation 4(9) and 4(11), the aim of which is to preserve the employee’s right in relation to “substantial change in working conditions to the material detriment” and “repudiatory breach” by his employer. As in a situation where the employer commits a repudiatory breach, under Regulation 4(9) the employee is given a choice whether to accept the substantial change in working conditions as bringing the contract to an end, or not. In my judgment, the effect of not accepting the substantial change as having the contract terminated should be the same as electing not to treat the contract as at an end by reason of the employer’s repudiatory breach, meaning that the contract remains in force. There is nothing in Regulation 4(9) to suggest that despite the employee not treating the contract as having been terminated, he, nonetheless, must be regarded in law as having been dismissed, or that should have the effect of Regulation 4(8) coming back into play.

In my judgment, it cannot be right that the very same objection that has brought the employee within scope of Regulation 4(9) can then operate to deprive him of the protection afforded by that regulation because the employee has chosen not to treat his contract as having been terminated, when the regulation specifically gives him that choice.

However, this conclusion, in my view, does not mean that the employee completely loses his right to later rely on such substantial change in treating his contract as having been terminated, with such termination still being regarded as dismissal under Regulation 4(9). Of course, the longer the employee waits or if he acts in a way to show that he has accepted the substantial change he might be taken as having affirmed the change, thus losing his Regulation 4(9) protection.

Further, Regulation 4(1) has the effect of preserving the employment contract, “except where objection is made under paragraph (7)”. Paragraph (7) states that paragraph (1) shall not operate to transfer the contract of employment of an employee who objects to becoming employed by the transferee. If a valid objection is made it appears there are three possible outcomes: (i) Regulation 4(8) “resignation”; (ii) Regulation 4(9) “dismissal”, and (iii) Regulation 4(9) employee choosing not to treat the contract as having been terminated. In any of the three scenarios the contract of employment does not transfer to the transferee by reason of the employee’s objection.

Such outcome might appear at odds with the purpose and operation of TUPE, namely “automatic transfer”. However, such “automatic transfer” is always subject to the employee’s right to object, and the employee cannot be forced to transfer his employment to the transferee despite his objection (see Katsikas v Konstantinidis 1993 IRLR 179, ECJ).

I find that, although the Claimant has chosen not to treat his contract as having been terminated, he never withdrew his objection. On the contrary, he kept repeating it. Accordingly, considering his clear and persistent objection to becoming employed by the Second Respondent, the Claimant choosing not to treat his contract of employment as having been terminated, in my judgment, cannot be taken as disapplying or overriding his objection. In my view, the answer (c) is also wrong.

The First Respondent was simply wrong in saying that the “default position” was that in the absence of the Claimant’s resignation his contract transferred to the [Second] Respondent. For these reasons, I find that his contract did not transfer to the Second Respondent.

Mr Bailey argues that the Claimant cannot avoid transferring to the Second Respondent and remain employed by the First Respondent. He submits that “[t]he fallacy in that reasoning is that he either had to elect to treat his employment terminated prior to the transfer (taking his chance under Reg 4(9)) or to go along with the transfer and treat his employment as terminated after the transfer; again taking his chance under Reg 4(9)”.

I understand Mr Bailey’s argument as saying that it was not open to the Claimant to put himself into such “limbo”. He had to decide whether he “goes across” or he “goes away”, and “staying put” was not an option he could take.

I disagree, because that ignores the choice of not treating his contract of employment has having been terminated, which, in my judgment, Regulation 4(9) gives to the Claimant. Further, I do not see why it must be the employee who should be “taking his chance under Reg 4(9)”, and not the employer. It is the employer who makes a change to the employee’s working conditions, and if the employer considers such change not “substantial” and/or not “to the material detriment” of the employee, it would seem logical that the employer should be taking its chance by treating the employee’s contract as having been terminated by operation of law under Regulation 4(8), and the employee should not be force[d] to make “the first move” by resigning or otherwise treating his contract as having been terminated.

If the employee chooses the option of not treating his contract as having been terminated under Regulation 4(9), while objecting to the transfer, in my judgment, it must follow that his contract remains with the transferor until such time as he is dismissed by the transferor or until he changes his mind and elects to treat his contract as having been terminated by reason of the substantial change under Regulation 4(9) (subject to the “affirmation” issue).

The Claimant’s objection under Regulation 4(7) set in motion the mechanism of Regulations 4(8) and 4(9). Having decided that the transfer would involve a substantial change in working conditions to his material detriment, the Claimant arrived at the junction where he had to decide whether or not to treat his contract as having been terminated and himself as being dismissed by the First Respondent. By making the decision not to treat his contract as having been terminated, in my judgment, he effectively kept his contract with the First Respondent alive, and by maintaining his objection to the transfer - he stopped it from transferring to the Second Respondent.

Mr Bailey submits that “[i]t was legally impossible to achieve what [the Claimant] wanted which was to object but to continue to be employed by [the First Respondent] on his existing terms and conditions. The only way in which his employment could continue on the same terms and conditions was to transfer.”

I agree, however, in my judgment, what was not legally impossible for the Claimant is to continue to be employed by the First Respondent on the terms as varied by the “substantial change” until his dismissal by the First Respondent or his acceptance of the substantial change as terminating the contract. That is because, in my judgment, Regulation 4(9) gives the Claimant that option.

It might be argued that from the practical point of view, the First Respondent simply could not perform the Claimant’s contract as varied by the “substantial change”. It did not have a garage in Battersea, nor could it operate the route 27 bus service after 9 November 2019. However, in those circumstances, it was open to the First Respondent to terminate the Claimant’s contract, as, I find, it has done (see below).

For these reasons, I find that the correct position is the answer (d), and that in those circumstances the Claimant’s contract of employment could not and did not transfer to the Second Respondent on 9 November 2019.

How and when has the Claimant’s employment ended?

I find that the Claimant’s employment has ended on 8 November 2019 by reason of the First Respondent dismissing the Claimant by purporting to transfer his contract of employment to the Second Respondent despite the Claimant’s objection and by informing the Claimant that it no longer considered him to be its employee. The First Respondent made it clear in its letters of 5, 7 and 8 November 2019 (see paragraphs 65, 67 and 68 above) that it would treat the Claimant’s employment as at an end either by reason of his resignation or the TUPE transfer to the Second Respondent. The fact that the First Respondent was wrong in its legal assessment does not mean that it was not ending the contract by its words and conduct.

In [her] email of 8 November 2019 at 14:11 Ms Knight made it clear to the Claimant that as far as the First Respondent was concerned the matter was closed and he was no longer in the First Respondent’s employment.

The First Respondent informed the Second Respondent that the Claimant was their employee as from 9 November 2019, and refused to accept the Claimant’s sick pay requests, forwarding those to the Second Respondent, thus further evincing its position of treating the Claimant’s employment with it as at an end.

The fact that the Second Respondent mistakenly thought that the Claimant had transferred to it and made several attempts to engage with him, and for a period of time treated him as its employee, in my judgment, is irrelevant. By that time, the Claimant’s contract had been terminated by the First Respondent, and therefore it did not transfer to the Second Respondent, and there was nothing for the Second Respondent to terminate as it purported to do on 22 November 2019 and again on 3 February 2020.

Finally, it might appear that after all that “mental gymnastics”, I have arrived at the same result as it would have been if the Claimant’s extant objection had been taken as him treating the contract as having been terminated under Regulation 4(9) (see paragraph 131.a above). In my view, there is a difference, not least in relation to remedies, in particular the application of Regulation 4(10). However, these issues are yet to be explored in these proceedings, and at this stage I make no judgment on them.’

‘…In my view the phrase "employer" is there deliberately introduced so as to comprehend the transferor and/or transferee as potentially subject to suit in respect of the termination/constructive dismissal, according to the time at which, and the circumstances in which, the employee exercises his right to terminate.’

Thus, where it becomes apparent, in advance of a relevant transfer, that the latter ‘would involve’ a substantial change in working conditions to the material detriment of a person whose contract of employment would be transferred, regulation 4(9) entitles that person to treat the contract as having been terminated at that stage and provides that he shall be treated for any purpose as having been dismissed by the transferor. Where that state of affairs is apparent or arises following transfer, the affected employee may adopt the same course at that stage, and, in that event, would be treated for any purpose as having been dismissed by the transferee. In our judgement, an employee who does not object to the transfer under regulation 4(7), and who does not exercise his right to treat the contract of employment as having been terminated under regulation 4(9), is not to be treated ‘for any purpose as having been dismissed by the employer’. To construe regulation 4(9) in any other way would be nonsensical, in requiring that an employee who had decided not to object to the transfer and not to treat the contract as having been terminated would, nevertheless, be treated as having been dismissed by the employer. That is consistent with the right preserved by regulation 4(11), whereby an employee is entitled to resign in response to a repudiatory breach of contract by his employer (and, in that event, would be treated as having been dismissed), but is not obliged to do so.

‘There are two questions. First, where a transfer of an undertaking will involve a substantial and detrimental change in an employee's terms and conditions of employment can that employee treat his contract of employment as terminated by the employer and seek compensation? Second, if the answer to the first question is “Yes,” against whom is the employee to obtain his remedy: is it the transferor of the undertaking or the transferee?

The starting point for seeking answers to these questions is Council Directive (77/187/E.E.C.). The purpose of that Directive is to protect the employee when his employer transfers the employer's business to another. The protection has to be that if the terms of engagement with the transferee will be significantly different from those which obtained with the transferor and the differences will be detrimental to the employee then the employee is to have the option of treating his employment as terminated and obtaining compensation. That, it seems to me, is the interpretation the Court of Justice has given to article 4(2) of the Directive in its decision in Merckx v. Ford Motors Co. (Belgium) S.A. (Case C-171/94) [1997] I.C.R. 352. Article 4(2) of Directive 77/187 provides:

“If the contract of employment or the employment relationship is terminated because the transfer within the meaning of article 1(1) involves a substantial change in working conditions to the detriment of the employee, the employer shall be regarded as having been responsible for the termination of the contract of employment or of the employment relationship.”

…’

‘…the transfer of an undertaking operates to discharge the contract of employment both under the Regulations and at common law. …’

Regulation 4(8) is ‘subject to paragraphs (9) and (11)’ in so far as an employee who falls within either such paragraph may elect to treat the contract as having been terminated, with the result that he is treated as having been dismissed by his employer. In our judgement, it is also subject to those paragraphs in so far as the consequences of his objection under regulation 4(7) are concerned, for reasons which emerge from a careful consideration of Humphreys.

‘…it is clear that to the extent that the common law right of the employee to terminate and sue for constructive dismissal is preserved by paragraph (5), it is a right which exists and must be asserted against the transferor employer. The reason is twofold. First, it is the nature of the common law right and remedy that both exist in respect of the employer who wrongly terminates the employee's contract of employment and cannot be asserted against a proposed transferee. Second, it is because the introductory wording of paragraph (4A) excludes the statutory novation under paragraph (1) and the comprehensive transfer of rights and obligations under paragraph (2); thus the remedy against the transferor employer is not transferred.’

‘(1) Except where objection is made under paragraph (4A) below, a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee. 

Without prejudice to paragraph (1) above, but subject to paragraph (4A) below, on the completion of a relevant transfer — 

all the transferor's rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this regulation to the transferee; and

anything done before the transfer is completed by or in relation to the transferor in respect of that contract or a person employed in that undertaking or part shall be deemed to have been done by or in relation to the transferee.

Any reference in paragraph (1) or (2) above to a person employed in an undertaking or part of one transferred by a relevant transfer is a reference to a person so employed immediately before the transfer…

(4A) Paragraphs (1) and (2) above shall not operate to transfer his contract of employment and the rights, powers, duties and liabilities under or in connection with it if the employee informs the transferor or the transferee that he objects to becoming employed by the transferee.

(4B) Where an employee so objects the transfer of the undertaking or part in which he is employed shall operate so as to terminate his contract of employment with the transferor but he shall not be treated, for any purpose, as having been dismissed by the transferor.

Paragraphs (1) and (4A) above are without prejudice to any right of an employee arising apart from these Regulations to terminate his contract of employment without notice if a substantial change is made in his working conditions to his detriment; but no such right shall arise by reason only that, under that paragraph, the identity of his employer changes unless the employee shows that, in all the circumstances, the change is a significant change and is to his detriment.’

At page 424A-G, Moore-Bick J (as he then was) summarised Katsikas v. Konstantinidis (Cases C-132,138 and 139/91) [1992] ECR I-6577 in which the Court of Justice had held that an employee had the right to object to a transfer, notwithstanding the absence from the Directive of any provision therefor, and that, were he to exercise that right, the transfer would not result in his becoming employed by the transferee. Moore-Bick J cited paragraphs 30 to 36 of Katsikas, including the following dicta:

Moore-Bick J observed that, shortly after the judgment in Katsikas, the 1981 Regulations had been amended to take account of that decision, to include within regulation 5 paragraphs (4A) and (4B) and to make certain consequential amendments. At page 425F-G, he noted:

Moore-Bick J further noted (at pages 425H - 426A) that, as far as could be discerned from the report in Katsikas, the employees’ objection to working for the transferee business had been a personal one and that there had been nothing to suggest that it had been based upon an expectation that the transfer would produce any substantial detrimental change to their working conditions, or any other significant disadvantage to them. In Merckx v. Ford Motors Co. (Belgium) S.A. (Case C-171194)[1997] I.C.R. 352, that additional factor had been present. Moore-Bick J then cited paragraphs 36 to 39 of the Court of Justice’s judgment in that case:

At page 427D-G, he continued:

It was against that background which, in Moore-Bick J’s judgement, the 1981 Regulations, and regulation 5 in particular, fell to be construed. At page 429B – 430E, he held:

Having so held, Moore-Bick J went on to hold that Mr Humphreys was entitled to pursue a claim for wrongful dismissal and to consider which defendant was liable to Mr Humphreys, holding as follows, at pages 431C - 432G:

The dicta of Roch LJ, at pages 433G - 434G are also instructive:

‘It is clear from the wording of Article 4(2) of Directive 2001/23 that it establishes a rule that the employer is to be regarded as responsible for the termination of a contract of employment or employment relationship, whichever party is technically responsible for the termination. However, that provision does not set out the legal consequences of that responsibility. Thus it does not impose on the Member States any obligation to guarantee employees a particular compensation scheme…’

‘…I find that the Claimant’s employment has ended on 8 November 2019 by reason of the First Respondent dismissing the Claimant by purporting to transfer his contract of employment to the Second Respondent despite the Claimant’s objection and by informing the Claimant that it no longer considered him to be its employee. The First Respondent made it clear in its letters of 5, 7 and 8 November 2019 (see paragraphs 65, 67 and 68 above) that it would treat the Claimant’s employment as at an end either by reason of his resignation or the TUPE transfer to the Second Respondent.’

Where a relevant transfer involves, or would involve, a substantial change in working conditions to the material detriment of a person whose contract of employment is, or would be, transferred under regulation 4(1) of the 2006 Regulations, regulation 4(9) confers on that person the right to treat the contract of employment as having been terminated. If he elects to exercise that right, he shall be treated for any purpose as having been dismissed by the employer, which, depending upon the circumstances, may be the transferor or the transferee. If he elects not to exercise that right, he transfers to the employment of the transferee, unless he has objected to so doing under regulation 4(7).

Where he objects to becoming employed by the transferee under regulation 4(7) in circumstances in which regulation 4(9) applies, the effect of that objection is to preclude the transfer of his contract, and of any of the rights and obligations etc for which regulation 4(2) provides, to the transferee.

In those circumstances, notwithstanding the employee’s election not to terminate the contract under regulation 4(9), regulation 4(8) operates so as to terminate the employee’s contract of employment with the transferor, by which entity he is treated as having been dismissed, and against which any remedy lies. He has no remedy against the transferee.

Whilst disagreeing with the route by which the Tribunal reached its conclusion at [152], and accepting no party’s submissions in their entirety, we agree that the Claimant’s contract of employment could not and did not transfer to the Second Respondent on 9 November 2019.

The relevant transfer operated to terminate the Claimant’s employment with the First Respondent transferor by reason of his objection, itself based upon the substantial change in working conditions to his material detriment which that transfer would (and has since been found to) involve.

As the Tribunal found, albeit for different reasons, the Claimant is to be treated as having been dismissed by the First Respondent transferor, which is the only entity against which any liability for that dismissal could lie.