It is common in an outsourcing situation for the incoming service provider to undertake the service at a different location to the client or the existing service provider. In this situation, case law now exposes the incoming service provider to a risk of automatically unfair dismissals.
The change in location will amount to a redundancy situation unless the employer is able to invoke clear and unambiguous mobility clauses. However, according to an Employment Tribunal decision this year, the change in workplace location of itself will not be an economic, technical or organisational reason entailing a change in the workforce (an “ETO reason”). If there is no ETO reason, any dismissal due to an employee refusing to move to the new workplace will be automatically unfair as such a dismissal is connected to the transfer.
This seems to lead to the absurd conclusion that in any outsourcing situation where the new service provider undertakes the service at a new location and attempts to move the workforce from the existing location to the new location, there will be a risk of employees claiming automatically unfair dismissal.
What can an incoming service provider do about this? For information on strategies to minimise the risk of automatic unfair dismissal claims in this situation, please contact Thomas Ince at Reed Smith on 020 3116 2998.