G was employed by ISS from 2002. ISS is a cleaning and maintenance service provider to the local authority in Ghent, Belgium. It had a contract consisting of 3 lots. Lot 1: museums and historic buildings; Lot 2: libraries and community buildings; Lot 3: administrative buildings. G was the project manager for all three areas of work. Her time was therefore split between the three Lots. The contract was retendered. ISS were unsuccessful. Lots 1 and 3 were awarded to A and Lot 2 was awarded to CM. ISS told G she would transfer to A. A refused, arguing there was no transfer. The Belgian labour court held there was no transfer and ISS were liable to G. ISS appealed and the Belgian appeal court held there was a transfer to both A and CM. The matter was referred to the ECJ to consider three issues:
- Was there a transfer to both transferees in proportion to the extent the employee worked in each part of the undertaking transferred? Or
- Did the worker transfer to the part of the entity in which the worker was principally employed? Or
- Is there no transfer at all?
Judgment of the ECJ
The ECJ held that the option of there being no transfer could not apply as that would amount to excluding the safeguarding of rights on transfer and deprive the Directive of its effectiveness.
As to the option of the worker transferring to the transferee of the part of the undertaking in which the worker was principally employed, the ECJ held this would disregard the interests of the transferee who would be required to employ the worker on a full time basis when they worked only part time in the part of the business acquired by the transferee.
This left the option of there being a transfer to both transferees. As to this the ECJ held that
- it was for the “[national] court to determine how any distribution of the contract of employment might take place. In that regard, [it] may take into consideration the economic value of the lots to which the worker is assigned, as suggested by ISS, or the time that the worker actually devotes to each lot…”.
- Further, “to the extent that such a possibility amounts to dividing one full-time employment contract into a number of part-time employment contracts, it must be borne in mind that, under [Art. 2(2)(a) of the Directive], the Member States may not exclude from the scope of that directive contracts of employment or employment relationships solely because of the number of working hours performed or to be performed. Consequently, such a division cannot be excluded merely because it involves the transfer to one of the transferees of a contract of employment that covers a small number of hours of work”.
- And; “such a transfer of the rights and obligations arising from a contract of employment to each of the transferees, in proportion to the tasks performed by the worker, makes it possible, in principle, to ensure a fair balance between protection of interests of workers and protection of the interests of transferees, since the worker obtains the safeguarding of the rights arising from his or her contract of employment, while the transferees do not have imposed on them obligations that are greater than those entailed by the transfer to them of the undertaking concerned…. However, it is for the referring court to take account of the practical implications of that division of the contract of employment in the light of the objectives pursued by Directive 2001/23”.
By way of conclusion the ECJ held; “where a transfer of undertaking involves a number of transferees, [Art 3(1) of the Directive] must be interpreted as meaning that the rights and obligations arising from a contract of employment are transferred to each of the transferees, in proportion to the tasks performed by the worker concerned, provided that the division of the contract of employment as a result of the transfer is possible and neither causes a worsening of working conditions nor adversely affects the safeguarding of the rights of workers guaranteed by that directive, which it is for the referring court to determine. If such a division were impossible to carry out or would adversely affect the rights of that worker, the transferee(s) would be regarded as being responsible for any consequent termination of the employment relationship, under Article 4 of that directive, even if that termination were to be initiated by the worker”.
On any view this is remarkable departure from the orthodox understanding of TUPE. In order for TUPE to apply the employee must be assigned to the organised grouping resources subject to the relevant transfer (Reg 4(1)). Although this is not expressly specified in the Directive it was the test developed in Botzen and others v Rotterdamsche Droogdok Maatschappij BV which held: “An employment relationship is essentially characterized by the link existing between the employee and part of the undertaking or business to which he is assigned to carry out his duties. In order to decide whether the rights and obligations under an employment relationship are transferred under [the Directive] … it is… sufficient to establish to which part of the undertaking or business the employee was assigned”. It is difficult to see how the test for assignment can be met with an employee in the position of G in this case. Is the ECJ to be taken to have overruled Botzen? Furthermore, the practical suggestion that the employment contract be split raises a number of practical issues. Is it legally possible to split the contract in this way? Is the employee to be contracted part time by both transferees? Whilst, it can be argued that Service Provision Changes under Reg 3(1)(b) are a purely domestic creation and therefore this decision has no application to SPCs, this is not the case for Reg 3(1)(a) transfers.
The EAT in McTear Contracts Ltd v Bennett has applied this case to SPCs.