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ECJ: Meaning of 'transfer of a business'

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 Thanks to James English of Hempsons solicitors for preparing this case summary

Is it a TUPE transfer if a majority shareholder takes over its subsidiary's activities after it is wound up?

Yes, held the ECJ in Ferreira da Silva e Brito & Others v Estado Portugues.

The applicants were dismissed as part of a collective redundancy when Air Atlantis, which provided charter flights, was wound up. Its main shareholder, TAP, began to operate some of its routes using its aircraft, offices and equipment, other assets and employees. The applicants brought proceedings seeking reinstatement and compensation, and the matter was referred to the European Court of Justice (CJEU).

The CJEU held that there had been a transfer for the purposes of the Acquired Rights Directive. The decisive factor in establishing that a transfer had taken place was the fact that the entity had retained its identity, indicated by the fact that the activity continued or resumed. In a situation such as air transport, the fact that tangible assets transferred was also a key factor. In this case, TAP had taken over the charter flight routes, including aircraft leases, assets, activities, and employees. It was irrelevant that they were integrated into TAP's structure, and did not retain an autonomous organisational structure. A 'functional link' between the assets and staff, and the activities which they carried out, had been preserved, which allowed TAP to carry out the same activity.