Transfer could be reason for dismissal even if potential buyer not yet identified

In CAB Automotive Ltd v Blake and others UKEAT0298/07, the EAT held that, where an administrator was "slimming down" a business with a view to sale, a tribunal could conclude that the reason or principal reason for the dismissal was "the transfer or a reason connected with it", even though no potential buyer was yet on the scene.

However, in this case, the tribunal had erred in failing to establish "the reason or principal reason" for dismissal. It had merely considered whether the dismissal was "connected with the transfer" (which in the EAT's view is not the same thing), before going on to consider whether the dismissal was for an economic, technical or organisational reason entailing changes in the workforce (an ETO reason). The case was therefore remitted to the same tribunal to reconsider this question.

The significance of a finding that the reason or principal reason for the dismissal was the transfer or a reason connected with it (other than an Economic Technical or Organisational reason) is that the dismissal will be automatically unfair and liability will pass to the eventual transferee. This case confirms the earlier EAT decision in Morris v John Grose Group Ltd [1998] IRLR 499. Although both cases concerned the provisions of TUPE 1981, the principle is thought to remain good law under TUPE 2006.