Most of us have been distracted by Covid-19 since March and could therefore be forgiven for missing a potentially very disruptive transfer ruling from the European Court of Justice. Where a transfer of undertaking involves multiple transferees,
- Employees may be transferred to each transferee on a part-time basis.
- Transferees will be responsible for the termination of any such relationship even when this is initiated by the employee
- How contracts are divided on a part-time basis is a matter for domestic (i.e. UK) courts to decide.
ISS Facility Services NV v Sonia Govaerts & Atalian NV, formerly Euroclean NV
What are the implications of this decision? Will it be binding?
As the case was decided before the end of the Brexit implementation period (31st December 2020) it is likely to remain of significant influence given the aim of current legislation is to convert EU law such as this into UK law.
It may be that transferees can argue in some cases that it doesn’t apply to their case as the facts differ. This will have to be tested in the courts.
- An argument that is also likely to be increasingly tested is that the undertaking is so fragmented upon transfer that it has lost its’ identity and there is no transfer at all.
- We are also likely to see more cases develop around what happens when the identity of an undertaking crystallises on transfer (e.g. a small part of a large organisation that wasn’t distinct before transfers).
Is it relevant to every transfer?
Arguably the judgment is only relevant to ‘business transfers’ under TUPE as ‘service provision change’ transfers (“SPCs” as they are sometimes known) are UK specific.
- Transferors may seek to dictate the proportion applicable to each employee
- Transferees will need to decide whether they can accommodate those who transfer, or find an economic, technical or organisational (‘ETO’) reason entailing a change in the workforce, to dismiss.
- Transferees may wish to collaborate to offer roles to employees to make the position more workable (which transferors may also want to dictate)
- Transferees will need to budget for both severance and detriment claims as affected employees may not be prepared to accept a series of part-time roles.
What do HR practitioners need to ensure?
As a transferee it will be essential to undertake proper due diligence to identify those who will transfer, whether they can be accommodated and ensure that the appropriate indemnities or financial accruals are in place.
We have provided a full case analysis below.