The TUPE regulations state that it is automatically unfair to dismiss someone in
connection with a relevant transfer unless certain exceptions apply. The Employment Appeal Tribunal (EAT) held in Tydeman and Haynes v Oyster Yachts Ltd and ors that if a tribunal decides that it was fair to dismiss an employee because of misconduct even though there was a transfer, it has to fully explain its reasons for reducing the person’s compensation.
Basic facts
Oyster Marine Holdings Ltd (OMHL), which built luxury yachts, got into serious financial difficulties and went into administration on 7 February 2018. Oyster Yachts Ltd (OYL) bought OMHL on 20 March and dismissed Mr Tydeman (the CEO) and Mr Haynes (the group finance director) a few days later.
The men claimed automatically unfair dismissal on the grounds that there had been a TUPE transfer from OMHL to OYL. OYL argued that it was entitled to dismiss them because of the financial mismanagement of OMHL which amounted to gross misconduct. Alternatively, it argued that it would have been entitled to fairly dismiss them in any event and consequently, any losses should be limited to the time it would have taken to bring about those dismissals.
Tribunal decision
The tribunal judge concluded that there had been a transfer of an undertaking from OMHL to OYL under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) and that the two men had been assigned to OYL. As such, they had been dismissed for a reason connected with the transfer. And as there was no economic, technical or organisational reason for the dismissals, they were automatically unfair.
However, the judge then went on to hold that, even if the men had been treated fairly, there was a 90 per cent chance that they would have been selected for dismissal by reason of redundancy subsequent to the transfer. It also held that, had the men been treated fairly after the transfer, they would have been dismissed for gross misconduct and both claimants would have contributed by 70 per cent to those dismissals.
The two men appealed.
EAT decision
Allowing the appeal, the EAT held that the issue of a potential dismissal by reason of redundancy had not actually been put before the tribunal as an argument. Instead, it was a matter that the judge herself had concluded was a possible reason for a fair dismissal. That being so, it was not open to her to consider it in her judgment.
With regard to the claims of misconduct, the EAT held that it was not possible to ascertain from the judgment what approach the judge had adopted in coming to her assessment that there was a 90 per cent chance the two men would have been dismissed for misconduct. For instance, it was unclear whether her conclusions were based on an assessment of the probability of dismissal for each of a number of items of misconduct or a series of acts of misconduct, all of which would have justified dismissal, and any one of which could have resulted in a 90 per cent chance of a dismissal.
Overall, the reasoning simply did not set out with sufficient clarity what conduct the employment tribunal found had occurred and/or how it would have been assessed by OYL. If there was culpable conduct of a very serious nature by the two men that would result in a substantial reduction in their compensation because it would be just and equitable to do so, then the reasoning for that reduction needed to be set out much more clearly.
Given the lack of reasoning, the EAT remitted the matter to the same employment tribunal to determine the outstanding issues.