The European Court of Justice (ECJ) has confirmed that for transfers involving multiple transferees, the employment contracts of transferring employees can be split proportionally between each transferee in accordance with the tasks completed and time spent working for each one.
The Respondent, a cleaning and maintenance company, employed the Claimant as a project manager for its three areas of work which were divided into three lots across the city of Ghent. The Respondent subsequently lost the contracts to supply cleaning and maintenance services to all three of its lots, two of which transferred to a company called Atalian NV and the final lot to a second company called Cleaning Masters NV. The Claimant was informed that her employment would transfer to Atalian as her work on these lots amounted to 85% of her time rather than 15% for the lot that transferred to Cleaning Masters.
The Belgium Court sought guidance from the ECJ about the impact on the employment of transferring employees in the event of a simultaneous transfer to multiple transferees.
The ECJ noted that the Acquired Rights Directive, which safeguards the rights of employees following a change of employer, does not envisage this situation where a transfer involves a number of transferees. The Belgium court proposed three potential possibilities in such a situation, the first being that the employment of the employee could be split between the transferees depending on the time spent working for each one, the second being that the employment would transfer only to the transferee whom the employee works for the most and the third being that the employee would not transfer at all.
The ECJ considered each possibility and disregarded the second option on the grounds that although the employees’ rights would be preserved, this would not protect the transferee who would have to employ a part time worker on a full-time basis. The third option was also rejected as this would render the purpose of the Acquired Rights Directive as ineffective.
It was concluded that the first possibility would ensure a fair balance between the protection of workers and transferees. In a situation involving multiple transferees, the Acquired Rights Directive should be interpreted as allowing a contract of employment to be transferred to each of the transferees, in proportion to the tasks performed by the worker concerned. Therefore, in this case, the Claimant’s employment should transfer to both Atalian and Cleaning Masters in proportion to the tasks that she performed for them. It was however noted that this will only be the case provided the transferring worker’s working conditions do not become worse and if the division of work is possible.
The ECJ confirmed that if a transferring employee’s working conditions deteriorated as a result or their rights were adversely affected, then the transferees will be liable for any termination of employment as a consequence.
- Implications for employers
It is important to note that as this decision involves the interpretation of the Acquired Rights Directive which is European Law, rather than domestic TUPE Regulations which set out the legal framework applicable in the UK.
The decision does however represent a significant departure from traditional thought around the situation involving multiple transferees and may impact future decisions of UK courts which could consequentially impact employers in the UK.