The decision in The Manchester College v Hazel and anor confirms that it is not possible to harmonise terms and conditions following a TUPE transfer if the affected employees are not subject to a restructuring, or other similar process, entailing changes in the workforce.

The Hazel case arose from Manchester College taking over a prison-teaching contract. The contract was subject to significant cuts in funding.  There were some immediate redundancies and other staff were told that, whilst their jobs were not under immediate threat, reductions in funding meant that they would have to be offered new employment terms, including a pay cut. 

When Mrs Hazel and her colleague refused to agree to the pay cut their employment was terminated and they were offered a new contract on reduced pay.  Both employees successfully claimed that their dismissals had been automatically unfair under the Transfer of Undertakings (Protection of Employment) Regulations 2006 and were awarded re-engagement on their original salary. 

The College appealed emphasising the difficult position of employers who acquire undertakings and have a legitimate business need to bring the terms and conditions of the transferring employees into line with those of their existing workforce.  Often it is the shape and terms of an existing workforce which will influence the success of a bid. 

Whilst the Court had some sympathy with this it pointed out that the legal position under the Directive and TUPE is clear; the right of employees to preserve their existing terms prevails over the interest of the employer in achieving harmonisation, at least if it is "connected with" the transfer.

Tantalisingly, however, the leading judgment seems to suggest that there may be room for further development of case law around what is meant by "connected to the transfer".  This point was not relevant to the Hazel ruling, but undoubtedly there will be further litigation on the issue.

TUPE has just been updated and the restriction on dismissals has been limited to apply only if "the reason or principal reason for dismissal is the transfer" (previously it extended to reasons connected with the transfer).

It is not clear if Mrs Hazel's case would be decided in the same way under the new TUPE regulations.  It's possible that, in light of European case law, the change of wording will not be regarded as significant. 

In the meantime employers seeking to harmonise terms and conditions following a TUPE transfer are advised to tread with caution.