Transfer of Undertakings (Protection of Employment) Regulations 2006
Economic, technical or organisational (ETO) reasons for dismissal
A dismissal of an employee by either the transferor or transferee because of the transfer will be automatically unfair unless there is an economic, technical or organisational (ETO) reason entailing changes in the workforce.
Examples of valid ETO reasons include:
• Economic reasons - where the volume of work has fallen to such an extent that profitability of the entity is unsustainable without dismissing staff
• Technical reasons - where the transferee wishes to use new technology and the staff employed by the transferor in the entity do not have the requisite skills
• Organisational reasons - where the transferee operates at a different location and it is not practical to transfer staff
Economic, technical or organisational (ETO) reasons for variation of employees' terms and conditions
Variations to employees' terms and conditions, for which the sole or principal reason is not the transfer itself but is an ETO reason connected with the transfer, may be permissible subject to being agreed between the parties (or their representatives).
This means that employment terms may be changed before or after a transfer where the sole or principal reason is either:
• entirely unconnected with the transfer, or
• connected with the transfer, but for an ETO reason