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[Thanks to Dr John McMullen of Short Richardson & Forth LLP for preparing this case summary]

The European Court of Justice has handed down its judgment in CLECE SA v Maria Socorro Martin Valor and Ayuntamiento de Cobisa (Case C-463/09) which is authority for the proposition that, for the purposes of the Acquired Rights Directive 2001/23/EC a mere change of service provider is not a transfer of an undertaking.

A local authority had contracted out the cleaning of schools and premises belonging to it. It terminated the contract and brought the service back in house. But it declined to employ the contractor's staff and, instead, hired in new employees to do the work. No assets transferred from the outgoing contractor to the local authority and as no staff were taken on, the Directive did not apply.

This is an application of the European Court test of a transfer on service provision change under which the mere change of provider cannot, without the transfer of assets or the taking of employees, amount to a transfer (see Süzen [1997] IRLR 255). If the situation had arisen in the UK, however, there would have been a relevant transfer under TUPE because Regulation 3 (1) (b) trumps European law and has effectively overruled Süzen, providing that a mere change in service provider can alone trigger a transfer of an undertaking.