Jeffrey Jupp's TUPE resource

February 12, 2018
by admin

Hare Wines Ltd v Kaur EAT – 17 October 2017

The issue in this case is whether an employee dismissed immediately before the transfer was automatically unfairly dismissed because the principal reason for the dismissal was the transfer (Reg 7).

The Facts

K was employed by R1, the transferor, which got into financial difficulty in late 2014.  HW agreed to purchase R1’s business.   At a meeting held just before the transfer, on 9 December 2014, K was dismissed by R1.  She was told the reason was that the business was ceasing to trade.  However, 6 or 7 other employees transferred from R1 to HW.   HW’s case was that at the meeting held on the 9 December, two days before the transfer, K had objected to transferring.

The ET Judgment

The ET had to resolve a factual issue.  HW said that at the meeting on the 9 December K had objected to the transfer by saying she was not happy working with HW.  K’s case was that she had a strained relationship with a manager, C, and that C did not want her to transfer and hence HW also did not want her to transfer.   The Tribunal resolved this factual dispute in favour of K.  It held but for her dismissal on the 11 December she would have transferred and therefore the reason for the dismissal was the transfer.

The EAT Judgment

HW appealed on the ground that the ET erred in law in determining the reason was the transfer or gave insufficient reasons for this decisions.  Essentially HW’s case is that reason for the dismissal was personal to K’s circumstances and therefore not related to the transfer.

The EAT (Choudhury J) dismissed the appeal for the following reasons:

  • Just because a reason is personal to the employee does not mean it is not because of the transfer. The regulations are designed to protect employees and caution should be exercised before introducing new categories of defence which may undermine this protection.
  • The proximity of the dismissal to the transfer is always a relevant consideration. Bork International v Foreningen Af Arbejdsledere I Danmark
  • Where there were existing difficulties which were ongoing but these were only resolved at the point of the transfer by dismissal it is open to the Tribunal to conclude that the transfer is the reason.
  • The ET had not taken a ‘but for’ approach but has sought to identify the reason forth dismissal (see Smith v Brooklands College).

In short: “An issue affecting an employee’s conduct or competence, if suddenly acted upon at the point of transfer, is unlikely to be the sole or principal reason for the dismissal. An employer taking the opportunity to dismiss in such circumstances could reasonably be said to be motivated by the transfer, thereby making the transfer the principal reason for the dismissal. It will all, of course, depend upon the facts of individual cases”.


Link to EAT judgment





December 12, 2017
by admin

Guvera Limited v Ms C Butler and Others EAT – 21 November 2017

It is not uncommon for a  business to be acquired by a transferee over a prolonged period, or, in share sale scenario, for control of the business to be increased by a parent company over time such that the parent company is effectively the employer.  This is particularly important for time limit issues and also in cases of insolvency.   This case explores these issues in the context of a share acquisition.

The Facts

On 23 January 2015 BB  (a subsidiary of G) bought shares in Blinkbox from Tesco. Mr de V, director of G in the UK, arranged the purchase and became to sole director of Blinkbox. It was clear that despite attempts to turn the business around, insolvency was now a prospect. G considered its options and was interested in purchasing Blinkbox’s assets and acquiring approximately 20 employees.

Mr de V left the business on 12 May 2015 at which point G took over the day to day control of Blinkbox. This continued until Blinkbox went into administration on the 11 June 2015. On 15 May 2015 54 employees of Blinkbox were made redundant. On the 18 May 2015 G announced to the remaining Blinkbox staff that they were now a part of G as opposed to the subsidiary.

The ET Judgment

The ET held that transfer had taken place on the 12 May 2015. The events after the purchase of shares could be divided into three periods:

  1. From 23 January 2015 to the end of April 2015 the business remained with Blinkbox, under the directorship of Mr de V, who had been given 90 days to turn the business around.
  2. From the end of April 2015 to 11 May 2015, when Mr de V resigned as director of Blinkbox. Insolvency was now a prospect for Blinkbox. G in considering its options, was interested in acquiring Blinkbox’s assets and approximately 20 employees. The ET found that there was no transfer during this period as the business remained “under the control of Blinkbox, Mr de V as its director and its own senior management team”.
  3. The third period started on the 12 May 2015 when Mr Damien King, G’s Chief Technical Officer arrived at Blinkbox following Mr de V’s departure and took over day to day control. This period continued until Blinkbox went into administration on 11 June 2015.

The ET observed that:

  1. A sale of the share capital in a limited company does not, as such, amount to a transfer of undertaking.
  2. The fact that a company is wholly-owned subsidiary of another does not, of itself, mean that the parent controls the business of the subsidiary.
  3. However, those principles do not preclude a scenario in which at the same time, or following, a share sale, there is also a transfer of undertaking from the company which was the subject of the share sale to another company in the group which it has joined as a result of the share sale.
  4. It is a multi-factorial test and no single factor is decisive.

The ET held that there was a transfer at the start of the third period, when G assumed day to day control of Blinkbox in a way which went beyond the mere exercise of ordinary supervision and information gathering between parent and subsidiary. This crossed the legal line identified by the Court of Appeal in Millam. The announcement that took place on the 18 May 2015 was not announcing a change implemented on that day but rather making official what had already taken place.

G appealed on the ground that the ET misdirected itself on the law focussing on the degree of control said to be exercised by the G over the Blinkbox rather than focusing on the true question as to whether control had actually passed from the Blinkbox to the G. Further and in the alternative, a transfer based on ‘assuming control’ requires precise findings of fact as to the point of transfer and the degree of control that is exercised; the ET failed to identify with any precision the point of transfer and as a result erred as to the date the transfer took place.

The EAT Judgment

The EAT (Mr Justice Lavender) dismissed the appeal and upheld the ET’s reasons:

The ET had correctly recognised that the test for transfer was multi-factorial and had found that G assumed the rights or powers of an employer towards the employees. In addition, the EAT found the submission that there could be no transfer unless G also assumed the responsibilities of an employer unattractive and  inconsistent with the policy underlying the Regs and the Directive. The EAT held that none of the cases to which it was referred establish that it is a necessary condition of a transfer that the transferee has assumed the obligations of employer towards the employees of the undertaking

Link to EAT Judgment

November 28, 2017
by admin

Securitas v ICTS Portugal ECJ – 19 October 2017

This case raises the question of whether a service provision change amounted the transfer of an economic entity that retained its identity (i.e. an old style transfer within Art 1(1) – TUPE Reg 3(1)(a)).  (In Portugal there is no service provision regulation similar to Reg 3(1)(b)).

Here a security company, ICTS, lost its contract to provide security guards to Securitas who sought to argue that the mere taking over of a contract could not amount to transfer. It had refused to take on the ICTS employees. It also sought to rely on the provision of a collective agreement which provided that if the employer lost a customer this would not amount to a transfer. The question also arose as to whether such a provision was void.

The ECJ Judgment

The ECJ held that there was no principle that a service provision change could never amount to the transfer of an economic entity that retained its identity. in particular:

(a) there was no requirement that the transferor and transferee had to be in a direct contractual relationship. A transfer could take place via a third party intermediary (i.e. a tender process).

(b) It was necessary to consider “all the facts characterising the transaction in question, including in particular the type of undertaking or business, whether or not its tangible assets, such as buildings and movable property, are transferred, the value of its intangible assets at the time of the transfer, whether or not the majority of its employees are taken over by the new employer, whether or not its customers are transferred, the degree of similarity between the activities carried on before and after the transfer, and the period, if any, for which those activities were suspended”.

(c) The background facts require an overall assessment of the case and none should be taken in isolation.

(d) In assessing the facts, the type of undertaking or business concerned must be considered. The degree of importance to be attached to each criterion will necessarily vary according to the activity carried or the production or operating methods employed in the relevant undertaking, business or part of a business. In a sector where the activity is based essentially on manpower, the identity of an economic entity cannot be retained if the majority of its employees are not taken on by the transferee. Where, however, the activity is based essentially on equipment, the fact that the former employees of an undertaking are not taken over by the new contractor to perform that activity, as in the case in the main proceedings, is not sufficient to preclude the existence of a transfer.

(e) The fact that the tangible assets essential to the performance of the activity, taken over by the new contractor, did not belong to its predecessor but were merely provided by the contracting entity did not preclude the existence of a transfer. However, only the equipment that was actually used in order to provide the services, excluding the facilities that were the subject of those services, were be taken into consideration.

(e) Because the collective agreement contained a provision that prevented a transfer when the employer (ICTS) lost a customer and this provision did not permit any consideration of the factual circumstances it contravened Art 1(1) of the directive and was of no effect.

Link to the ECJ judgment


The point of principle in the case, namely whether, an SPC can amount to an old style transfer is unlikely to be of much interest given there are express provisions in Reg 3(1)(b) dealing with this.  However, the case does provide a useful reminder that the requirements for old style transfers are broad and fact sensitive and this may be helpful in those cases in which the SPC requirements are not fulfilled.



September 6, 2017
by admin

Xerox Business Services Philippines Inc Ltd v Zeb EAT – 01 September 2017

This is a rare case of an offshore transfer.  At issue was whether the employee was entitled to transfer to Manila in the Philippines on his  existing UK terms and conditions (‘Ts and Cs’).

The Facts

C was employed by the transferor (X UK) in its accountancy department.   His place of work as stated in his contract was ‘Leeds or Wakefield’ and such other place as the employer might require him to work within reasonable commuting distance of his home.  The accountancy department of X UK was offshored to the transferee, X Philippines, with effect from 1 October 2014.  It was accepted that this was transfer to which TUPE applied.    Employees were given a choice.  They could object to the transfer and if they did they would receive a generous redundancy payment.  If they did not object they would not transfer but would still be made redundant but only with the statutory minimum redundancy pay.  X Philippines would have no requirement to carry out the transferring work in the UK after the transfer. Employees asked if they could transfer to the Philippines.  They were told they could, but only on local (i.e. Philippines) Ts and Cs.

C said he wanted to transfer to the Philippines on his existing Ts and Cs.  This was refused and X Philippines explained that if he was to transfer from his existing Ts and Cs this would defeat the purpose of the offshoring which was to reduce costs.  (The UK salary was 10 times that payable in the Philippines).  C was ultimately dismissed. and paid statutory redundancy pay.

The ET Judgment

C brought a claim for unfair dismissal.  There were various procedural challenges but also C argued that he was not redundant.  The ET agreed and held that redundancy was not the genuine reason for the dismissal.   The work still needed to be done, albeit in Manila, and the real reason why C was dismissed because he wanted to remain on his existing terms. Secondly, the ET held there was an agreed variation to C’s place of work.  It had been agreed that he could transfer to Manila.  This was a variation which was permissible by Reg 4(5).


The EAT (HHJ Richardson) allowed the appeal and held:

(1)  There was no mutual variation.  Following the transfer, X Philippines was required to employ C in Leeds or Wakefield.  It was not required to employ him in Manila.    C was only prepared to work in Manila if his existing Ts and Cs were honoured and therefore there was no agreement as to the terms on which C would be employed.   Ordinary contractual principles apply to a reg Reg 4(5) variation (see Reg 4(5C)).  It was not possible to separate the location of work provision from the other Ts and Cs because the offer put forward by the transferee was that an employee could transfer only if he accepted local Ts and Cs.

(2)  There was a genuine redundancy situation.  The ET erred by focusing on the position in Manila and did not apply the statutory test under section 139 of the Employment Rights Act 1996.  The first question was whether, as a matter of fact, the requirements of the transferee’s business for employees to carry out work of a particular kind in the place where the employee was employed by the employer, had ceased.  The ET did not specifically address this question but the findings of fact were only consistent with an answer that those requirements had ceased.

(3)  Neither party in the ET had addressed Reg 7 of TUPE (i.e.whether the sole or principal reason for the dismissal was the transfer).  The transferee had not raised it because it was not raised by C.  Nevertheless the EAT held that it ought to be addressed by the tribunal in any TUPE unfair dismissal case because it is a core part of unfair dismissal law in such a case.   Generally a genuine cessation or diminution of business or another form of genuine business reorganisation if it entails changes to the workforce before or after transfer will fall within Reg 7(2). If the sole or principal reason does fall within Reg 7(2), then the reason for dismissal will either be redundancy or some other substantial reason and the ET will go straight on to apply the test in section 98(4) of the ERA.  The case was remitted to determine this issue.

Link to judgment

June 28, 2017
by admin

Federatie Nederlandse Vakvereniging v Smallsteps BV ECJ – 22 June 2017

The ECJ considered the application of the Directive to pre-pack administrations.    Four employees and their trade union brought proceedings after the employees were dismissed following a pre-pack.

Article 5(1) of the Directive provides that the automatic transfer provisions under Art. 3 and Art. 4 of the Directive; shall not apply to any transfer… where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of a competent public authority (which may be an insolvency practioner authorised by a competent public authority).

This is replicated in Reg. 8(7) of TUPE.


The Facts

The Estro Group operated 380 nurseries and employed 3,600 workers.  It became insolvent and an arrangement was made whereby it would transfer a substantial proportion of its business to a newly created company, Smallsteps.  An administrator was appointed on the 10 June 2014.  A declaration of insolvency was made by the Court under Dutch law on the 5 July 2014 and on the same day the business, consisting of 250 of the 380 nurseries, was transferred to Smallsteps.    The claimants worked in nurseries taken over by Smallsteps and were not offered contracts.   They sought a declaration that their employment had transferred.

The Dutch court referred a number of questions to the ECJ but the principal issue was whether Art. 5(1) applied to pre-pack whereby the arrangement for the transfer of the business was made before the declaration of insolvency and carried out immediately after that.  I.e. where there never any intention to enter liquidation.


The ECJ stressed that Art. 5(1) only applies to insolvency proceedings where they have been instituted with a view to the liquidation of assets of the transferor and they under the supervision of an insolvency practitioner.    This has to be construed strictly as it deprives workers of the rights on transfer.  This exclusion does not extend to the process of preparing for insolvency.  Whilst in this case there was an insolvency procedure and the transfer did not take place until after the declaration of insolvency, the procedure was aimed at the continuation of the undertaking and not its liquidation.  Therefore, Art. 5(1) did not apply.

A pre-pack procedure may be aimed both at maximising the return for creditors and ensuring the continuation of the undertaking, its operational character or the viability of its business.  The ECJ held that although there may be some overlap of those two objectives within the aims of any given procedure, the primary objective of the procedure in this case was to ensure the continuation of the undertaking and therefore Art. 5(1) did not apply as the procedure was not instituted with a view to the liquidation of assets.


English case law has taken an absolutist approach looking at the character of the insolvency proceedings rather than the underlying intention (see Key2Law).   It is possible, that this case may lead to a challenge to that approach, although that us unlikely because Key2Law held that Reg 8(7) will never apply to administration proceedings.

Link to Judgment

June 13, 2017
by admin

ICAP Management Services Limited v Berry QBD – 6 June 2017


My last post concerned this case when an interim injunction was refused.   I noted the case raised interesting arguments in relation to the interaction between TUPE and restrictive covenants and, in particular, the right to object under Reg 4(8).

At the the trial of the action the employee’s claim failed because he could not establish that there was a transfer. The key issue that eventually crystallised was whether the employee’s employer had in fact in changed.  This arose in the context of a share sale.

The High Court Judgment

In a helpful analysis the High Court (Garnham J) considered the legal issues under 4 headings:

i. By whom was the employee employed

The Court noted that in Albron Catering BV v FNV Bondgenoten that it was not necessary for the employee to be employed by the transferor.  He could be a seconded employee who had in effect a ‘non contractual employer’.  This would be the case if the employee was seconded on a permanent basis although they remained contractually employed by the seconding employer.    Here the judge held the employee was never seconded in this manner.

ii. Need for a change in employer

As may thought to be self-evident, it is essential in order to establish a transfer that the employer must change.  The Court noted this was clearly set out in the Directive and the Regulation as well as in both ECJ case law (Berg v Besselen (C-144/87) and CLECE SA v Martin Valor (C-462/09))  and domestic case law (Brookes v Borough Care Services [1988]).

iii.  The significance of a share of shareholding

The Court noted that a change in the legal control of the employer does not itself transfer the business (Millman v Print (Factory (London) 1991 Ltd).  However in some cases a change in share ownership may in reality mean there is a transfer of an undertaking.

iv.  The indicia of transfer 

The Court considered MillmanJackson Lloyd Ltd v Mears Group plc and the ECJ case law referred to above and held that the fact that the transferred business has been integrated is a relevant factor but it is not the test.  “[T]he critical elements of the test are whether the new party (i) has become responsible for carrying on the business, (ii) has incurred the obligations of employer and (iii) has taken over day to day running of the business. It seems to me that those elements of the test can be captured in more colloquial terms – “Has the new party stepped into the shoes of the employer?””.

The Court applied this test and held that there had been no change in the manner in which the business was operated before and after the share sale.

Link to judgment

April 7, 2017
by admin

ICAP Management Services Limited v Berry QBD – 3 March 2017

This case concerns an application for an interim injunction to enforce post termination restrictions (PTRs).  To avoid those PTRs the employee sought to invoke TUPE in a creative and interesting way.

The Facts

B worked for ICAP in a senior role.  He resigned giving the required 12 months’ notice on 22 July 2016.  He was off to joint a competitor, BGC.   ICAP reminded him of his PTRs and placed him on gardening leave.   His employment was therefore due to terminate on 21 July 2017.   So far as material, his PTRs provided, in summary;

(i)  For 6 months following the date of termination [i.e. 21 July 2017] he would not work for a competitor.

(ii)  For 9 months following the date of termination [i.e. 21 July 2017]  he would not solicit business from any of ICAP’s clients with the purpose of providing them with the services that ICAP had provided, if he had been involved in providing such services in the 12 months before termination.

These periods would be reduced by any time spent on gardening leave.    The effect would therefore be that they would have expired at the end of his gardening leave when he would be free to join BGC and solicit clients.   ICAP presumably content that he had been kept away from their clients and competitors for 12 months.

B was no doubt happily digging his garden when he learned that ICAP had been acquired by TB with effect from the 30 December 2016.  On 7 February 2017 his solicitors wrote to ICAP drawing attention to this and asserting it was a TUPE transfer and that B objected to the transfer.  Reg 4(8) of course provides that  where an employee so objects, the relevant transfer shall operate so as to terminate his contract of employment with the transferor.   Therefore, if B was right and there was transfer, because of his objection to the transfer, the contract terminated on the transfer.

Of course his PTRs were still binding but because he had been on garden leave for over 6 months and because this time was set off against the period within the PTRs he was free to join BGC and free to solicit their clients from the 25 April 2017.

B joined BGC and ICAP applied for an injunction.

The judgment

Frustratingly for TUPE watchers there was insufficient evidence before the Court for the judge (O’Farrell J’) to  determine whether or not there was a transfer, although all parties agreed that is was a serious issue to be tried (it appears to have been accepted that if there was a transfer then B’s argument was correct).  The case was therefore decided on conventional injunction principles and and ICAP obtained an interim injunction,  with a speedy trial listed for the end of April.  (It is not known whether the case has been resolved).

Link to judgment





March 29, 2017
by admin

Born London Limited v Spire Production Services Limited EAT – 28 March 2017

If a transferor provides inaccurate Employee Liability Information (ELI) to a transferee does the transferee have a right to compensation under Reg 12?  Answer; not necessarily.

The Facts

Born took over a print finished contract from Spire.   It was a Reg 3(1)(b) service provision change.  The client was Sotheby’s. The print finishing contract contract had a term of 5 years.    Born were told by Spire, as part of the Reg 11 ELI provided by Spire before the transfer, that the 30 + employees who were to transfer had a ‘non-contractual’ Christmas bonus of one week’s pay plus £7.50 per year of service payable each November.  After the transfer the employees asserted that this entitlement was contractual and for the purposes of a strike out application this was assumed to correct. (Indeed in a separate and subsequent case between Born and some employees a different Employment Tribunal held this to be the case.)

The ET Judgment

Born brought a Reg 12 claim against Spire. Born’s case being, essentially, that because the bonus was non contractual it would have had a discretion not to pay it and would not have done so.  It had therefore suffered loss which exceeded £100,000 over the life of the contract.

Its case was that Spire failed to comply with Reg 11(2)(b) which required Spire to provide:  Those particulars of employment that an employer is obliged to give an employee pursuant to section 1 of the [ERA] (i.e. the Statement of Initial Particulars)Section 1(4) of the ERA provides that the statement that the employer was obliged to provide the employee with was to contain particulars of:  (a) the scale or rate of remuneration or the method of calculating remuneration,  (b) the intervals at which remuneration is paid (that is, weekly, monthly or other specified intervals). 

Spire applied to strike out Born’s case as having no reasonable prospect of success.  Spire’s case was, quite simply, that it had provided the section 1(4) details in relation to the Christmas bonus, (as it had) and that section 1(4) did not require it to state whether the bonus was contractual.   As it had no obligation to state whether the bonus was contractual it was not in breach of Reg 11 when it stated a bonus was non contractual in circumstances when it was in law contractual.

The Employment Judge acceded to Spire’s application.  Born appealed.

The EAT judgment

Born’s case was that it was implicit in section 1(4) that the employer was required to state whether remuneration was contractual and, if it was not, then it was required by Council Directive 91/533/EU (on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship; (the 1991 Directive) and Acquired Rights Directive (the ARD).  Consequently, Spire was required to accurately inform Born on the transfer that the bonus was contractual.

The EAT (HHJ Eady QC) dismissed the appeal for the following reasons:

(i)  It was important to note that although section 1 of the ERA was incorporated into Reg 11 it had a much broader application.

(ii) Although section 1 is a right which pertains to employees the particulars provided are not a contract although the statement is persuasive (but not conclusive) evidence of a contract.

(iii)  Although pay is likely to be an important part of the contract not all forms of remuneration are contractual the learned judge was not persuaded that non-contractual matters should be left out of the section 1 statement.

(iv)  The reference in Article 2(1) of the 1991 Directive to the ‘contract or employment relationship’ envisages that there may be particulars provided which are not contractual.  Further, the requirement in Art 2(2) that the employer notify the employee of the ‘essential aspects of the employment relationship‘ does not impose a requirement to identify the contractual nature of the entitlement.

(v)  The requirement in Art 3(1) of the ARD for the transferor to notify the transferee of all the rights and obligations that will be transferred is not confined to contractual rights.

Link to Judgment


The remedy of a transferee is likely to lie either in any contractual indemnities (there were none in this case) or in an action for negligent misrepresentation.

March 8, 2017
by admin

Tees Esk & Wear Valleys NHS Foundation Trust v Harland EAT – 3 March 2017

In Service Provision Change cases, after determining that there is an organised grouping it is necessary to consider under Reg 3(3)(a)(i) whether that grouping had as its ‘principal purpose the carrying out of the activities concerned on behalf of the client’.  This case considers the correct approach to this issue.


The facts

The case concerned care for a seriously disabled person, CE, provided by the NHS Trust for a period of 10 years.     Over time, and very gradually, CE’s condition improved.  Before 2011 he had required seven to one care.  From 2011 he required four to one care.    As a result CE moved to a new facility in 2012 in which there were number of other service users  requiring specialist care but housed in separate flats.   At that time four to one 24 hour care translated into 10 full time equivalent posts (or 11 employees).   CE’s condition continued to improve further, such that by  February 2014 he required only one to one care during the day and two to one care for six hours on a Friday.  He rarely required care at night.   As a result of the improvement in CE’s condition the carers engaged to look after him were required to work flexibly and to look after other service users in the same building.     In 2015 there was transfer to DH Ltd who had successfully won the contract for the care of CE.    The NHS Trust, prior to the transfer, told DH Ltd there was an organised grouping of 11 employees who’s principal purpose was caring for CE.     During consultation it reduced this to 7 employees who had been engaged in 2014 as spending more than 75 per cent of their time in caring for CE.

The ET judgment

The ET held there was a consciously organised grouping.  A team had been deliberately put together to look after CE.  Further that all 11 employees had been assigned to the organised grouping.  On the issue of principal purpose however the ET held that the organised grouping was too large and as a consequence the the principal purpose was no longer the care of CE, rather it had become diluted.   The purpose had fallen away and was no longer the dominant purpose of the group but by the date of transfer had become a subsidiary purpose.     Had the group gradually reduced as CE’s condition improved then the outcome may have been different but it did not and the principal purpose no longer existed immediately before the transfer.  Consequently there was no transfer of any employee.

The EAT judgment

The EAT (HHJ Eady QC) held that the ET was correct to focus on the position in 2015.  Reg 3(3)(a)(i) requires an assessment of the position immediately before the transfer.  The ET made a clear finding that the principal purpose had changed over time so  by the date of the transfer that it was not predominantly the care of CE.

The central issue was whether the ET were entitled to look at the facts on the ground rather than the original intention.   HHJ Eady QC held that there was no ‘bright line’ which meant excluding either of these factors.  Rather the words of the regulation should be applied. Adopting that approach, it is apparent that it is not simply the carrying out of the activities that means that the existence of the organised grouping meets the relevant condition; the carrying out of those activities has to be the principal purpose of that grouping, whether or not it is in fact carrying them out at any particular time. If the grouping in fact carries out other work, that might well point to its organisation being for a purpose other than the activities relevant to the service provision change. Similarly, if the grouping comprises far too many employees than would be necessary for the activities in question, that might suggest either that not all the staff concerned were in fact assigned to it or that the real purpose behind the organisation of the group was other than the carrying out of the relevant activities for the client. These are possibilities that an ET might properly consider relevant to its assessment, but it would not be sufficient to identify the actual activities being carried out by the organised grouping without determining its principal purpose.

Reg 3(3)(a)(i) does not ask what was the transferor’s intention (although this will be relevant to determining whether or not there is an organised grouping and may suggest its purpose) but what was the principal purpose of the organised grouping of employees. Addressing this question the ET found that, at the relevant time, this was the carrying out of activities other than those which were to be the subject of the service provision change.

Link to judgment


The failure to reduce the size of the team caring for CE had the effect that there was no transfer of any member of the team.  Had the NHS Trust reduced the team over time as CE’s care needs reduced, then those engaged in his care at the time of transfer would have transferred.

There are two ways to avoid what occurred here.  The first (which is likely to more successful than the second) is to reduce the size of the team over time so that it matches the requirements of the service as those requirements change.  The second is, when the service is coming up for retender, to consciously reorganise the team so as to reduce it in size.

February 13, 2017
by admin

Asklepios Kliniken Langen-Seligenstadt GmbH Felja ECJ AG – 19 January 2017

The Advocate General has provided an opinion in two joined cases referred from the German Labour Court on the issue of whether a transferee can be compelled to apply the provisions of a collective agreement adopted after the transfer.   Essentially a revisiting of the static/dynamic issues in Alemo-Herron.

Arts 3(1) and 3(3) provides:

1. The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee.

Member States may provide that, after the date of transfer, the transferor and the transferee shall be jointly and severally liable in respect of obligations which arose before the date of transfer from a contract of employment or an employment relationship existing on the date of the transfer.

3. Following the transfer, the transferee shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement, until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement.

The Facts

The employees were employed by a public authority until 1997 when they transferred to a private company, KLS.  KLS ageed that the employees employment would continue to be governed by a collective agreement  (known as the BMT-G II) to which it was not a party and by any subsequent collective agreements that supplemented, amended or replaced it.

In 2008 the business of KLS was transferred to another company in the same group, Asklepios.  Asklepios is also not party to the BMT G II agreement or to the collective agreement that replaced it (the TVöD) or another collective agreement that supplemented the TVöD (the TVÜ-VKA).

The employees sought a declaration that Asklepios was was bound by the terms of the two collective agreements (TVöD and TVÜ-VKA).      Asklepios on the other hand argued that having regard to the Directive and to Article 16 of the Charter of Fundamental Rights of the European Union.  

The AG’s Opinion

The AG first revisited Werhof and Alemo-Herron.  The AG observed that although the end result was the same in both cases (rights under collective agreements remained static) the reasoning was different in each case.  In Werhof the ECJ applied Art 3(1) and held that the provisons of the collective agreement transferred and are to be observed after the transfer.  However, this is only the position until there is a new collective agreement.   The transferee is not bound by a new agreement to which he was not a party.   In Alemo-Herron this reasoning was built on by the application of  Article 16 of the Charter, which provided for the freedom to conduct a business, one component of which is the freedom of contract.

The AG then held:

The starting point is that as at the date of transfer the employee should work for the transferee on the same terms and conditions as with the transferor.   There can be no derogation from this principle and in effect the transferee is subrogated to the transferor’s rights and obligations.

The AG then addressed the argument that where a contractual clause contains a dynamic provision to the effect that the parties agree to be bound by future collective agreements then it must follow that the employee is entitled after the transfer to the rights contained in any future collective agreement.  In his opinion this did not follow because Art 3(3) has a limiting effect.  Arts 3(1) and (3) represent the interaction of two rules. First, the general rule that the rights and obligations arising from a contract of employment in existence on the date of transfer within the meaning of that directive must be transferred to the transferee.    Second, the degree to which the transferee remains bound by terms and conditions agreed under a collective agreement applicable to the transferor on the date of the transfer.

So far as terms and conditions provided for in a collective agreement are concerned, Art 3(3) operates to limit the scope of the obligations on the transferee . It follows from that provision that it is only the terms and conditions provided for in the collective agreement in force on the date of transfer that must continue to be observed by the transferee.

Art 3(3) provides a compromise intended to reconcile the interests of the transferee and those of the employees affected by the transfer of the undertaking.   It strikes a balance between competing interests: on the one hand, the employee has a right to benefit from the specific terms and conditions previously agreed with the transferor, while, on the other hand, the transferee has a legitimate right to know the extent of its future obligations and, therefore, not to be bound by new terms and conditions defined at the end of a collective bargaining process in which it will not or cannot participate.

The AG opined that:

the dynamic reference clause ceases to have effect in the situations provided for in Article 3(3) that is to say where [the collective agreement] expires, terminates or is replaced and, if the Member State has so provided, where at least one year has passed since the undertaking was transferred. Those clauses do not therefore apply to collective agreements concluded after the date of transfer, unless the new employer expresses a different wish.

The AG did not feel it necessary to consider Art 16 of the Charter because the issue could readily be resolved by a proper application of Arts 3(1) and 3(3).

Link to Judgment