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TUPE: Rossiter v Pendragon - Court of Appeal

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According to a case summary issued by the Independent Council of Law Reporting, the Court of Appeal decided the appeal in Rossiter v Pendragon (and the associated case, Clarke v Air Foyle Ltd) last week. The transcript is not yet available.

The Court of Appeal has overturned the EAT decisions in both cases, and held that a change to employees' terms and conditions following a TUPE transfer does not automatically amount to a constructive dismissal - the employee still needs to establish a fundamental breach of his pre-transfer rights. Thus a transferee can vary terms in the same way the original employer might have been able to do, if such a variation would not have been a fundamental breach by the original employer.

I set out the full summary below (copyright ICLR)

An employee could not claim constructive dismissal on a transfer of undertaking where his working conditions had substantially changed to his detriment without showing a fundamental breach of contract by the employer

The Court of Appeal so stated when (i) allowing the appeal of Pendragon plc against the ruling of the Employment Appeal Tribunal [2001] ICR 1265 that its employee Mr Norman Rossiter had been constructively dismissed and (ii) allowing the appeal of Air Foyle Ltd against the decision of the Employment Appeal Tribunal on 3 October 2001 which, on a preliminary ruling, dismissed its appeal against an employment tribunal's decision that Mr Crosby-Clarke had been constructively dismissed.

The two conjoined appeals raised the same issue whether an employee employed on different terms on a transfer of undertaking could establish constructive dismissal by reason of substantial change in his work conditions to his detriment when the acts of the employer were not repudiatory or in breach of contract.

PETER GIBSON LJ said that it was quite clear from the language of reg 5(5) of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE") that no new right was thereby intended to be created . The regulation preserved the rights arising apart from TUPE and the only such right was that of an employee to resign when faced with repudiation of his contract by the employer. If there were a right to claim constructive dismissal if there had only been a substantial change in circumstances without breach of contract that would arise apart from not under TUPE.

The language of reg 5(5) was chosen to implement art 4(2) of the Directive and s 95(1)(c) of the Employment Rights Act 1996. Only conduct of an employer amounting to repudiation would entitle an employee to terminate a contract without notice.

The appeal tribunal in Rossiter's case[2001] ICR 1265,1275 erred in holding that s 95(1(c) should be construed in a way enabling an employee to claim constructive dismissal where there was no repudiatory conduct by the employer. The test in Western Excavating (ECC) Ltd v Sharp [1978] QB 761 still applied as much to a case involving a transfer of undertaking as when there was no transfer.
Jonathan Parker LJ and Sir Christopher Slade agreed.