When a TUPE transfer takes place between a single transferor and multiple transferees under UK case law the rights and liabilities relating to employees transfer with whichever part of the business they are most closely linked. This will be decided upon by considering factors including the time the employee spent in each part of the business. However, in ISS Facility Services NV v Sonia Govaerts and Atalian NV the CJEU has taken a contrary position.
It seems many TUPE cases revolve around cleaning services and this one was no different. ISS undertook cleaning and maintenance of buildings in Ghent, Belgium. The work was divided into three lots comprising of different types of buildings. Ms Govaerts was project manager responsible for all three lots. When the contract for the work was re-tendered, ISS was unsuccessful, with two lots being awarded to Atalian and the third lot being awarded to Cleaning Masters NV. Ms Govaerts was 85% assigned to the lots awarded to Atalian, 15% assigned to the lot awarded to Cleaning Masters NV. ISS wrote to her informing her she would become an employee of Atalian. Atalian disputed there had been any transfer of an undertaking and they did not consider Ms Govaerts to be their employee.
After Ms Govaerts raised legal action the Belgian courts found a transfer of an undertaking had taken place under the Acquired Rights Directive but sought a preliminary ruling from the CJEU. The question asked was whether, under the Acquired Rights Directive ("ARD") (upon which TUPE is based) (i) employment transferred to each transferee albeit in proportion to the extent of employment of the worker in question in the part of the undertaking acquired by each of the transferees; or (ii) employment transferred in its entirety to the transferee that acquired the part of the undertaking in which the worker was principally employed; or (iii) if neither of the foregoing applies there is no transfer to any transferee?
The judgment of the CJEU was that, where there are multiple transferees, the rights and obligations arising from a contract of employment are transferred to each of the transferees in proportion to the tasks performed by the worker concerned, provided that division of the contract is possible and neither causes a worsening of working conditions nor adversely affects the rights of the worker. In practice this opens the door to contracts being split into several part time contracts with different employers following on from a transfer.
The CJEU went on to say that if such a division was impossible or would adversely affect the rights of the worker, the transferees would be regarded as responsible for any consequent termination of employment, even where that termination is initiated by the worker.
This is a very different approach to the one we are used to seeing in UK courts and tribunals. However under TUPE there are two types of relevant transfer to which the regulations apply - a "business transfer" and a "service provision change" ("SPC"). A business transfer is where there is a transfer of an economic entity that retains its identity (whether that be a complete business or undertaking or a part thereof). An SPC takes place where a client engages a contractor to do work on its behalf, engages a different contractor to do that work in place of the first contractor, or brings previously contracted work back "in house" - this is commonly referred to as outsourcing. Much of the UK case law relates to SPC cases rather than business transfers. While outsourcing cases are covered by the ARD it does not include the concept of SPC. As such it could be argued that while this case would be a precedent for a business transfer, it would not apply in cases of SPC. Alternatively, it may be that UK caselaw now conflicts with the CJEU.
In circumstances where the judgment is applicable, the proviso regarding working conditions and adverse effect on employee rights is likely to be a significant factor. It is difficult to envisage many situations where the division of an employee's contract would not cause a worsening of their working conditions or have an adverse effect on their rights. Terminations in these circumstances may well be considered to be automatically unfair in the absence of any ETO reason. This potentially leaves transferees with liabilities for notice payments, unfair dismissal claims and in some circumstances redundancy costs. Transferees should be looking to ensure that they have adequate indemnities in place to protect their position should these circumstances arise.
