How can we help?


Employment contracts can be split between multiple transferees

UK Case law has established that TUPE can still apply to business transfers where the undertaking is transferred to multiple transferees provided the undertaking does not lose its identity. Further, TUPE can apply to service provision changes in the same circumstances provided it is possible to identity to which contractor the individuals transfer.

In the recent Belgium case of ISS Facility Services NV v Sonia Govaerts & Atalian NV, the European Court of Justic (ECJ) had to consider this point again in the context of business transfers. It held that the Acquired Rights Directive (on which TUPE is based) does not deal with multiple transferees but that the ultimate objective of the Directive is to safeguard employees’ rights and allow their contracts to continue unchanged to avoid individuals being in a less favourable position.

On this basis, it determined that in such cases it was possible for the contract to be transferred to all of the transferees in proportion to the tasks performed by the individual provided the individuals’ rights and working conditions were not adversely affected (possibly resulting in a full time contract being converted to a number of part time contracts). It would be up to national courts and tribunals to consider the practical implications of this. It further held that if this division presents a problem or is not possible and the employee is dismissed (or resigns) as a result, liability will fall to the transferee(s).

Whilst this reaffirms the existing UK position that there may be a business transfer where the undertaking is transferred to multiple transferees, the approach taken by the ECJ is very surprising and marks a significant departure from the current UK case law. The splitting of contracts will raise a number of practical issues and it’s hard to see how this approach will not be detrimental to the employee.

UK Case law has established that TUPE can still apply to business transfers where the undertaking is transferred to multiple transferees provided the undertaking does not lose its identity.

With the UK in the process of leaving the EU it is unclear the extent to which this will be followed by the UK. Further, the judgment only applies to business transfers and not service provision changes which are outside of the scope of the Acquired Rights Directive. Regardless it is wise for parties to try and factor this situation into their commercial indemnities where possible.

About this article

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

  • 16 May 2024
  • Immigration

What Employers need to know about Biometric Residence Permits

Biometric Residence Permits (BRPs) are biometric immigration documents that are issued to non-EEA nationals and EEA nationals, who have been granted permission to stay in the UK.

  • 14 May 2024

Clarkslegal’s London team moves to new Chancery Lane office

The London office of Clarkslegal has relocated to Chancery House, on Chancery Lane. The staff is enthusiastic about the relocation because Chancery Lane has a longstanding association with the legal profession in London.

  • 10 May 2024
  • Employment

New duty on employers to prevent sexual harassment – coming October 2024

The Worker Protection (Amendment of Equality Act 2010) Act 2023 is due to come into force in October 2024.

  • 09 May 2024
  • Employment

Labour Party Employment Law Proposals – Promises of further consultations and a softer approach

The Prime Minister recently announced a raft of changes, to be implemented in the next parliament, aimed at reducing the number of people who are economically inactive due to illness.

  • 09 May 2024
  • Corporate and M&A

Navigating corporate transparency: ECCTA reforms series – part 1

The Economic Crime and Corporate Transparency Act 2023 (ECCTA) received Royal Assent in October 2023 and marked a pivotal moment in corporate governance and transparency.

  • 07 May 2024
  • Employment

Changes to TUPE rules from 1 July 2024

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’) aim to safeguard employees’ rights on the transfer of a business or on the change of a service.