Employment contract split between multiple transferee employers

11th August, 2020 by Nick Benton

The recently decided European Court of Justice (ECJ) case, ISS Facility Services v Govaerts, could have significant implications for UK employers, specifically affecting the way the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) are applied where a TUPE transfer involves multiple transferees.

Facts

ISS Facility Services (ISS) undertook cleaning services for the City of Ghent in Belgium, which was divided into three lots: cleaning of museums and historical buildings (lot 1); libraries and community centres (lot 2); and administrative buildings (lot 3). Ms Govaerts was the project manager for all 3 lots.

Following a retendering exercise, ISS lost the contract for all three lots which were instead award to two separate companies, lots 1 and 3 to Atalian NV and lot 2 to Cleaning Masters NV. As a result, ISS told Ms Govaerts that her employment transferred to Atalian NV under the Belgium equivalent of TUPE (Collective Agreement No. 32a). Atalian NV resisted this asserting that Collective Agreement No. 32a did not apply because, amongst other reasons, the fragmentation of the original contract meant there was no transfer of an undertaking.

The matter eventually came before the Ghent Higher Labour Court. Given Collective Agreement No. 32a transposed the Acquired Rights Directive, a reference was made to ECJ. The ECJ was asked to clarify what should happen when there is a simultaneous transfer of various parts of an undertaking to multiple transferees, including to whom transferring employee should transfer.

Decision

The ECJ confirmed that transferring employees’ employment contract could be split between multiple transferees in proportion to the amount of work undertaken by the employee pre-transfer. It was for national courts to determine this, however it would not always be appropriate. If the division of the contract was impossible or resulted in a worsening of the rights of the transferring employees, termination of their contract may be justified.

In reaching its decision the ECJ rejected the idea that transferring employees should transfer exclusively to the transferee that took over the part of the undertaking in which the employee had previously undertaken the majority of their work.

Nick Benton comments:

"This decision is significant as it runs contrary to the current approach in the UK for dealing with fragmented TUPE transfers. In particular, it brings into question established case law principles which had confirmed an employee should transfer to the transferee who takes over the part of the undertaking in which the employee undertook the majority of their work. Going forwards, we may now see more employment contracts divided between transferee employers but also more disputes as to whether particular employees should transfer at all. Contact the team if you wish to discuss this further."

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