Employment Law Cases
TUPE: employment contract can be split between transferees
ISS Facility Services NV v Govaerts & Atalian NV
In a transfer to multiple transferees under the Acquired Rights Directive, the contract of a transferring worker can be split between each of the transferees in proportion to the tasks performed by the worker, provided that such a division is possible and does not adversely affect the worker’s rights and working conditions.
ISS had cleaning contracts with the city of Ghent which were divided into three lots. Ms Govaerts was the project manager for all three lots. The contracts were re-tendered and awarded to two new contractors, with one of the contractors taking two of the lots (to which Ms Govaerts was 85% assigned) and the other taking the third lot (to which Ms Govaerts was 15% assigned).
ISS, the transferor, argued that Ms Govaerts’ employment contract was automatically transferred to the transferee that was awarded two lots. Ms Govaerts challenged this. The Labour Court of Ghent referred three issues to the ECJ:
- Should liability for the employee transfer to each of the transferees in proportion to their work acquired by each of the transferees?
- Should the employee transfer to the transferee acquiring the part of the undertaking in which the employee was principally employed?
- Should there be no transfer of the employee to any transferee?
Option 3 was a non-starter for the ECJ as this would amount to excluding the safeguarding of rights on transfer and deprive the directive of its effectiveness.
Option 2 also didn’t find favour with the ECJ as this disregarded the interests of the transferee who would have to employ the worker on a full-time basis when they worked only part time in the part of the business acquired by the transferee.
This left Option 1 for which the ECJ expressed its approval. It held that the directive did not prevent an employee’s contract being split into part-time contracts, each in proportion to the extent to which they were assigned to the parts of the business acquired by the transferees. However, the ECJ held this will only occur if such a division is possible and does not cause a worsening of the working conditions of the individual or have an adverse effect on their rights – and this is something for national courts/tribunals to decide. In addition, the ECJ held that if a division of the contract is not possible or would adversely affect the rights of the worker, the transferee(s) would be regarded as being responsible for any consequent termination of the employment relationship, even if that termination was initiated by the worker.
Link to judgment: https://www.bailii.org/eu/cases/EUECJ/2020/C34418.html
This was a consideration of the European Acquired Rights Directive, which applies when there is a ‘proper’ business transfer. Although in UK law we have legislation relating to ‘service provision’ changes, this is home grown UK law which is not influenced by Europe. In service provision changes it has long been recognised that the services transferred might be divided between transferees and there is case law on this – usually with the employee transferring to the transferee who is taking on the majority of the contract. However, there is no liability on the transferees if the contract is too fragmented to be able to be transfer the employee.
When the Acquired Rights Directive was implemented it did not envisage a ‘proper’ business transfer being to more than one transferee and so this case makes it clear that if the facts allow, an employee can continue to be employed by more than one transferee and if this is not possible then both transferees are liable.