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TUPE: Fragmented undertakings

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Can employees assigned to an undertaking which is fragmented upon transfer be transferred to multiple transferees?

Yes, held the Court of Justice of the European Union (‘CJEU’) in ISS Facility Services NV v Sonia Govaerts & Atalian NV, formerly Euroclean NV.

The CJEU held that where a transfer of an undertaking involves a number of transferees, the rights and obligations arising from the contracts of employment of the individuals assigned may be transferred to each of the transferees in proportion to the tasks performed by the individuals concerned provided that division of the contract as a result of the transfer is possible and doesn’t worsen the individual’s working conditions or otherwise adversely affect their rights. If division of the contract is not possible or would adversely affect the individual’s rights then the transferee(s) will then be liable for any consequent termination of the employment relationship, even if this is initiated by the individual (see paragraph 38 of the judgment).

As the judgment concerns the interpretation of the Acquired Rights Directive it shouldn’t impact service provision change transfers under regulation 3(1)(b) of TUPE but represents a radical departure from the orthodox position in respect of business transfers under regulation 3(1)(a).

Thanks to Tim Cross of Vista Employer Services for preparing this case summary.