267: TUPE: Splitting employment contracts between multiple transferees

The European Court of Justice (ECJ) has recently considered and reached a somewhat surprising decision, in a case involving the division of an undertaking between multiple transferees and whether an employment contract of a transferring employee could be split between each transferee in proportion to the task performed by that employee (ISS Facility Services NV v Sonia Govaerts and Atalian NV).

In this case, Ms Govaerts was employed by ISS to manage the cleaning and maintenance of public buildings in Ghent, Belgium. The work was divided into three lots: museums and historical buildings (lot 1); libraries and community centres (lot 2); and administrative buildings (lot 3). Ms Govaerts was assigned approximately 85% to lots 1 and 3, and 15% to lot 2. When these services were retendered, ISS was unsuccessful. Lots 1 and 3 were awarded to Atalian and lot 2 to Cleaning Masters NV. The question of what should happen to Ms Govaerts’ employment contract was referred to the ECJ by the Belgian court.

The ECJ agreed that a business transfer had taken place but noted that the relevant EU Directive does not specifically envisage a transfer to multiple transferees. Although the purpose of the Directive is to safeguard employees’ rights, this had to be balanced against the rights of a transferee to continue its business and ensure that the transfer is commercially viable. If Ms Govaerts transferred solely to Atalian because she performed most of her work on lots 1 and 3, Atalian would be taking on a full-time employee but only inheriting part of her work. However, if she did not transfer to either contractor, she would lose her job.

In its decision, the ECJ settled on the compromise of transferring Ms Govaerts’ contract to both Atalian and Masters NV in proportion to the tasks she performed for them. As the ECJ observed in its judgment, dividing an employment contact in this way raises many practical issues, if only because working for multiple employers is unlikely to be an attractive prospect for most employees.

The ECJ ruled that it is for national courts to determine the precise split, taking into account such factors as the economic value of the employee’s tasks or the time spent on each task. If dividing the contract proves impossible or results in a detriment to the employee’s working conditions or employment rights, the ECJ suggested that the employee can resign and the transferee will be liable for termination costs. However, splitting a contract should not be ruled out just because the employee has only a few hours of work.

This judgment is difficult to reconcile with UK law. TUPE does not specifically deal with a transfer to multiple transferees, but UK case law suggests that employment contracts should transfer to the transferee which is taking on the majority of the activities carried out before the transfer, an approach which was rejected by the ECJ in this case. It remains to be seen whether Tribunals will change their approach in light of this decision. The status and applicability of ECJ decisions following Brexit is still also unclear.