Automated Summary
Key Facts
The case involves the transfer of management of the Berkeley Estate in central London from Lancer to Astrea on 29 September 2017. Four claimants (Duncan Ferguson, John Kevill, Andrew Lax, and Byron Pull) were dismissed by Astrea for gross misconduct related to new contracts signed by the directors. The Employment Tribunal found that the new contracts were void under TUPE regulation 4(4) as they were varied by reason of the transfer. The Tribunal also found that Duncan Ferguson was unfairly dismissed (with a 25% increase for failing to follow ACAS Code), while John Kevill's dismissal was unfair but reduced by 100% for conduct. Additionally, Astrea was found to have failed to inform the claimants about measures relating to the transfer, and was ordered to pay three weeks' pay compensation.
Issues
- Astrea failed to inform the second, third and fourth respondents of measures relating to the transfer and was ordered to pay each of the four claimants three weeks' pay.
- The tribunal found the contract terms as to bonus, termination payment, and notice were void under TUPE regulation 4(4) because the transfer was the reason for variation.
- The tribunal concluded Andrew Lax and Byron Pull were not assigned to the relevant group of employees, so their claims of unfair dismissal failed.
- Duncan Ferguson was unfairly dismissed because of the transfer, while John Kevill was unfairly dismissed but his award was reduced by 100% for his conduct.
Holdings
Lancer Property Holdings Ltd (referred to as 'Holdings' in the document) is the owner of Lancer, with annual turnover of £13.6 million, profit after tax of £4.2 million, and shareholder funds of £30.1 million. Holdings owns a number of other property companies.
Remedies
The tribunal awarded three weeks' pay to each claimant for Astrea's failure to inform and consult as required by TUPE regulations. It also declared that the bonus and termination payment terms in the new contracts were void due to being varied in anticipation of the transfer. The first claimant's unfair dismissal award was increased by 25% for failing to follow the ACAS Code, while the fourth claimant's award was reduced by 100% due to conduct. The first claimant's discrimination claims were dismissed.
Legal Principles
- Regulation 4(4) of TUPE voids contract variations if the sole or principal reason for the variation is the transfer. The court found the directors' contracts were void under this regulation as the transfer was the principal reason for the variations.
- The court applied the 'substance over form' principle to determine that the contracts were void as their substance (compensating directors for loss of business) differed from their form (improved terms for legitimate commercial purposes).
- The court found that directors breached their fiduciary duties under section 172 of the Companies Act 2006 by varying contracts for personal gain rather than promoting the company's interests. The contracts were not made for a legitimate commercial purpose but to compensate directors for loss of business as owners.
- The EU abuse principle, as applied in Kratzer v R+V Allgemeine Versicherung AG (2016), was used to void contracts not made for a legitimate commercial purpose. The court found the new contracts were void under this principle as they were designed to compensate directors for loss of business rather than serve a legitimate business purpose.
Precedent Name
- Albron Catering BV v FNV Bondgenoten
- Bilta (UK) Limited v Nazir
- Marcroft v Heartland
- Alemo-Herron v Parkwood Leisure Ltd
- In re Duomatic
- Power v Regent Security Services Ltd
Cited Statute
- Transfer of Undertakings (Protection of Employment) Regulations 2006
- Companies Act 2006
- Employment Rights Act 1996
Judge Name
Goodman
Passage Text
- Contract terms as to bonus, termination payment, and notice are void because the transfer was the reason for variation.
- Dismissal without heed to ACAS Code may warrant up to 25% increase in award.
- Conduct so substantially bad that 100% reduction in awards is appropriate.