Reg 4(9): 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.

This is usually seen as easier for an employee to show than constructive dismissal, which of course was a remedy available to employees under the pre-2006 regulations if it could be shown that the new employer was failing, or would fail, to keep to an essential term of the contract of employment.  Within 4(9) however, it is simply enough to show that working conditions would change substantially such as to cause material detriment. This need not involve any contractual breach at all. Naturally there is a great deal of overlap.

In Tapere v South London & Maudsley NHS Trust [2009] UKEAT the employee’s employment was transferred from one NHS Trust to another. The transferee made it clear that following the transfer it would wish her to move from her old offices in Camberwell to the Bethlem Hospital in Beckenham. She wasn’t happy:

[The Claimant] was reluctant to move to work at the Bethlem in Beckenham as she believed that it would increase the journey time. She is a single mother and has to collect her child from school and be available till 8 a.m. when her child would be collected for school by taxi. She gave evidence that if she travelled via her old route of the A13 the journey time to Beckenham would be significantly longer – an additional 10 miles.

The transferee sought to instigate this change under a mobility clause. She resigned and claimed both constructive dismissal, on the basis that the mobility clause did not actually permit the change in location, and reg. 4(9), in that the change was a substantial change in working practices to her material detriment.

The Employment Tribunal found against her on both counts. I shan’t go into the discussion of the mobility clause here, of which there is much, but it is worth a read. Of interest however is the construction of “substantial change” and “material detriment”. The Tribunal had given rather scarce consideration to the terms, but had stated that it had looked at the matter objectively.

The EAT ruled that that the correct interpretation of detriment was that found in the discrimination caselaw. The EAT noted Shamoon v Royal Ulster Constabulary [2003] IRLR 285, in which Lord Scott followed the key decision of Chief Constable of the West Yorkshire Police v Khan [2001] IRLR 830. Lord Scott, at para 105:

‘a detriment exists if a reasonable worker would or might take the view that the [treatment] was in all the circumstances to his detriment’, must be applied by considering the issue from the point of view of the victim. If the victim’s opinion that the treatment was to his or her detriment is a reasonable one to hold, that ought, in my opinion, to suffice. In Khan the complainant, desiring to apply for a new job, wanted a reference to be given by his employers. His employers refused to give one. It was clear that if they had given one it would have been an unfavourable one. It might be said that a reasonable worker would not want an unfavourable reference. But the complainant wanted to be treated like all other employees and to be given a reference. The House concluded that this was a reasonable attitude for him to adopt and that the refusal to give him a reference, constituted ‘detriment’. He was being deprived of something that he reasonably wanted to have. And while an unjustified sense of grievance about an allegedly discriminatory decision cannot constitute ‘detriment’, a justified and reasonable sense of grievance about the decision may well do so.

So the correct approach is to consider whether the Claimant holds the view that he has been subjected to a detriment, then consider if he holds that view reasonable. The test is thus subjective, as one looks at the employee in particular. The consequences of this case is that the bar for reg. 4(9) dismissal remains low. I will review the law on mobility clauses in a later post.

This case demonstrates well the ‘purposive’ approach taken in construing regulations designed to implement European law. First, “working conditions” in TUPE does not mean “the conditions under which one works” but is to be interpreted far more widely. Second, the word material in this case does not connote physical materiality, it simply reinforces that the detriment must not be trivial or fanciful, which is of course usually dealt with by the word ‘substantial’.

Finally it should be noted that the successful Appellent was represented by James Medhurst, who blogs about the case himself and has been kind enough to comment on this blog on occasion.

In the recently reported High Court case of SG & R Valuation Service Co v Boudrais & Ors [2008] EWHC 1340 (QB) the contract of employment had no such provision, therefore the court had to determine whether enforced garden leave is compatible with their existing contracts. It is settled law that there is no implied obligation on an employer to provide work for the employee: the oft-quoted principle being from Asquith J in Collier v Sunday Referee Publishing Co [1940] KB 647:

Provided I pay my cook her wages regularly she cannot complain if I choose to take any or all of my meals out.

This creates quite an image of a bachelor Asquith in war-torn Britain, being dressed by his valet in the morning, writing the odd judgment, before deciding whether it’s dinner at home or at his club. I hope it was like the Drones.

Collier is only the starting point however. The fact is that for many high value employees is their skills and expertise, as well as the interests of their own career, require them to remain in work. This will especially so if their future prospects are damaged by time away from the workplace. In this case it was held that “any dissociation from the market for a substantial period would result [the employees'] skills becoming stale”, and furthermore that a substantial part of their remuneration was performance-related bonus that they would be unable to achieve if kept from work. This means that a right to work must be placed in the contract of employment – given the nature of the parties this must have been the bargain they struck.

Mr Justice Cranston goes on to consider if this right to work is qualified in any way. He holds that it is, and usefully sets down the principle:

Employees who have a right to work have that right subject to the qualification that they have not, as a result of some prior breach of contract or other duty, demonstrated in a serious way that they are not ready or willing to work, or, to put it another way, that they have not rendered it impossible or reasonably impracticable for the employer to provide work. The breach of contract or other duty must constitute wrongdoing, by reason of which they will profit or potentially profit. In such circumstances, there is no obligation on the employer to provide work, although the contract of employment is ongoing. This is not an implied term in the employment contract but is a qualification to the legal construct, the right to work.

On the particular facts – emails between the departing employees which made their destructive intentions clear – the company did have a right to enforce garden leave. This case is a very useful reference point for employers, but also provides important safeguards for the “innocent” employee.

This case illustrates what a particular and nuanced exercise it is to construe a contract of employment in comparison with, say, a simple commercial contract. Also, finally, I was pleased to see the following at paragraph 17: 

Reference was made by the claimant to the ACAS Code of Practice on Disciplinary and Grievance Procedures. That suggests, sensibly enough, that where there is a difficulty with an employee and an allegation of gross misconduct a brief period of suspension on full pay should be undertaken. As I have said, that may well indicate good practice, but it says nothing about the contractual position of these defendants. Not only is there no evidence it was incorporated in their contracts, by usage or otherwise, but it lacks contractually binding language.

ACAS guidance is simply that – guidance as to good employment relations. Although failure to follow that guidance can be indicative of the reasonableness of a party’s action, or have statutory consequences, I’m pleased that the court here so thoroughly rejects it as valid extraneous evidence as to the construction of a contract of employment.

• If use of the database is widespread, finding another job after dismissal will be near impossible; this could seriously affect an unfairly dismissed employee’s chance of mitigating his loss pending the unfair dismissal finding (at which one assumes the dismissal will be removed from the system). This will mean higher compensatory awards, and potentially arguments over damage to reputation and so on.
• What if I’m being investigated for an allegation that constitutes dishonesty, but I resign for other reasons? What if I’ve been constructively dismissed? What if the allegations of dishonesty were victimisation following a discrimination claim? The disputes reaching the database operators could well trespass into findings best left for a tribunal – and if the procedures don’t exist then serious injustice could result.
• Will there be any compulsion for those employers signed up to the system to report their employees? A lot of investigations and disciplinary procedures end with a resignation, a cessation of the procedure, and the employer simply refusing to respond to subsequent reference requests. An employee in that situation still has reasonable chances of employment, but if his former employer is obliged to put him on the database then his chances are shot.

I can well understand why there are concerns. A TUC representative stated to the BBC:

“The TUC is seriously concerned that this register can only lead to people being shut out from the job market by an employer who falsely accuses them of misconduct or sacks them because they bear them a grudge. Individuals would be treated as criminals, even though the police have never been contacted.

“The Criminal Records Bureau was set up to assist employers to make safe appointments when recruiting staff to work with vulnerable groups. The CRB already provides appropriate and properly regulated protection for employers. Under the new register, an employee may not be aware they have been blacklisted or have any right to appeal.”

…and at the moment those very genuine concerns aren’t answered.

The report is so short it also acts as a good swot-sheet for constructive dismissal authorities.

EDIT: Actually, I’ve just remembered an incident where this did happen to me at work.