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Employment Law Cases
TUPE: splitting liability between transferees
McTear Contracts Ltd v Bennett
An ECJ decision that EU law requires contracts of employment to be split where there is a transfer to multiple transferees applies to ‘service provision changes’ under TUPE.
Mr Bennett and his colleagues worked for Amey and spent most of their time refurbishing kitchens in social housing on a contract with a council (NLC). They were split into two teams made up of the trades necessary to fit the kitchens with each team working across the geographical area covered by the contract.
NLC retendered the contract and split it into lots defined by geographical area, north and south. One lot was awarded to Mitie and the other to McTear. The transferees didn’t take on all of Amey’s employees who went on to bring tribunal claims. The tribunal decided that there had been service provision changes (SPCs), under TUPE, reg. 3(1)(b), from Amey to McTear and Mitie and that all the employees transferred in accordance with Amey’s allocation of them. In so doing, it held itself bound by previous authority that any given transferring employees had to transfer to one or other transferee and ruled out the possibility of any given employee transferring to both transferees. Both transferees appealed – not challenging that there had been a SPC but arguing that the tribunal had got it wrong as regards the allocation of employees. In particular, they based their appeal on the ECJ case of ISS Facility Services NV v Govaerts & Atalian NV where judgment was given after the tribunal hearing. In the Govaerts case the ECJ held that that 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.
The appeal was allowed.
The EAT held that while Govaerts does not apply directly to SPCs (because they are creatures of purely UK law), it nonetheless must apply. Its reasoning was as follows. TUPE, reg. 4, which deals with the consequences of a transfer, is in essentially the same terms whether the transfer concerned is of an entity which retains its identity or is SPC. Therefore, the same principles should apply regardless of the type of transfer at issue. What’s more, many transfers will qualify as both. The statutory scheme would lose coherence if reg. 4 were to be construed differently for each type of transfer.
The EAT held that: ‘there is no reason in principle why an employee may not, following such a transfer, hold two or more contracts of employment with different employers at the same time, provided the work attributable to each contract is clearly separate from the work of the other(s) and is identifiable as such. The division along geographical lines, of work previously carried out under a single contract into two new contracts is, in principle, a situation where there could properly be found to be different employees on different jobs’.
Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2021/0023_19_2502.html
This decision has the potential to cause serious, practical difficulties in circumstances where contracts are divided between multiple new transferees - given that there is no obvious mechanism for working out how employment contracts should be divided between different employers. Following Brexit, it is possible that UK courts could depart from the Govaerts decision but this can only be done at Court of Appeal level or higher. And, of course, there is always the possibility of legislative intervention from the government.