The European Court of Justice (“ECJ”) has held that an employment contract of a transferring worker may be split between more than one transferee in proportion to the tasks performed by the worker.
In the case of ISS Facility Services NV v Sonia Govaerts, Atalian NV, formerly Euroclean NV, ISS Facility Services held cleaning contracts for a number of buildings in the Belgian City of Ghent, which was divided into three “lots”. The Claimant was employed as the Project Manager for all three lots. The contracts were re-tendered and awarded to two new contractors. One contractor was successful in taking two of the lots (to which the Claimant was 85% assigned) and the other contractor took the third lot (to which the Claimant was 15% assigned).
The Belgian Courts found that the transfer did qualify as a transfer of an undertaking under the Acquired Rights Directive (the European legislation from which TUPE is derived), but they asked the European Court of Justice (“ECJ”) to rule upon whether the Claimant’s contract should be split between the new contractors, or whether she should just transfer to the contractor that held the lot upon which she was mainly employed.
The ECJ held where a transfer of an undertaking involves two or more transferees, an employee’s contract of employment could be split into part-time contracts, each in proportion to the tasks performed by the worker provided that the division of the contract of employment as a result of the transfer is possible and does not cause either a worsening of working conditions or adversely affect the safeguarding of the rights of workers guaranteed by that directive. If such a division were impossible to carry out, or would adversely affect the rights of that worker, the transferee(s) would be regarded as being responsible for any consequent termination of the employment relationship, even if that termination were to be initiated by the worker.
What does this mean for you?
This judgment marks a significant departure from existing UK case law, which currently does not favour the division of employment contracts between multiple transferees, instead employees tend to transfer to one transferee based on how or where they do the majority of their work. This decision may well lead to a change in how Employment Tribunals approach similar cases in the future, with contracts of employment being divided between multiple transferees. In addition, where there is transfer involving multiple transferees, a transferee who is taking on the majority, but not all the services, may look to use this case to seek to reduce the employment-related obligations which they inherit.
We consider that it is likely that in many cases a division of the contract between multiple transferees will result in the worker’s rights or working conditions being adversely affected. Whilst the ECJ has confirmed that an employment contract can be terminated in this situation, the termination of an employee with more than two years’ service may still be automatically unfair under TUPE and the transferees will be liable for notice payments and potentially redundancy payments.
This information is provided for guidance only and should not be considered specific legal advice. If you would like further advice or assistance in respect of any of the topics covered please contact Kelly Gibson on 0114 218 4307 or Kelly.Gibson@tayloremmet.co.uk