Search

How can we help?

Icon

The importance of understanding the economic entity in a TUPE situation

For there to be a business transfer under TUPE there must be an ‘economic entity’ that retains its identity post-transfer.

To assess what amounts to an economic entity, the nature of the business activities needs to be understood.  In a labour-intensive business, such as cleaning, the transfer of the employees will be vital for TUPE to apply, however, for a business more heavily reliant on other assets such as land or equipment, the transfer of these will be the important factors.  This is always a question of fact for the Tribunal.

This point arose in the ECJ case of Securitas v ICTS Portugal.  In this case, Securitas took over security services from ICTS.  ICTS engaged security guards who were responsible for monitoring the entry and exit of persons and goods, by means of video surveillance devices. ICTS also provided them with uniforms and radio equipment.  Securitas took on the equipment involved in the work but refused to take on the employees and the question arose as to whether this prevented TUPE from applying.

In a labour-intensive business, such as cleaning, the transfer of the employees will be vital for TUPE to apply, however, for a business more heavily reliant on other assets such as land or equipment, the transfer of these will be the important factors.

The ECJ, deciding the point under Portugal’s Labour Code, reiterated the above principles and returned the case to the court to determine the matter on the facts.  It is worth noting, that one of the key questions for the ECJ in this case was whether the transfer of a service such as this could amount to a transfer of an undertaking, a point not in contention under English law by virtue of service provision changes being expressly covered under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

Disclaimer
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.

Author profile

About this article

Read, listen and watch our latest insights

art
  • 16 September 2026
  • Employment

Received an Employment Tribunal Claim? 6 Things Employers Should NOT Do

We are well and truly underway with implementation of the Employment Rights Act 2025 (“ERA 2025”) and October brings the next tranche of changes that employers will need to be ready for.

art
  • 14 September 2026
  • Corporate and M&A

Key provisions found in a Shareholders’ Agreement – SHA Series Part 2 of 5

Discover the key provisions in a shareholders’ agreement, including ownership, decision-making, share transfers, exits and leaver clauses.

art
  • 11 September 2026
  • Privacy and Data Protection

Data Protection Breaches – Personal Liability for Employees

It is well known that employers have obligations under the Data Protection Act 2018 (the “Act”) but, perhaps lesser known, is that employees can be held personally liable for certain actions amounting to criminal offences under the Act.

Pub
  • 07 September 2026
  • Corporate and M&A

Frequently Asked Questions About Shareholders’ Agreements – Episode 1

Join Emma Docking and Jonathan Hayes as they explore some of the most frequently asked questions about shareholders’ agreements, including what they are, how they work alongside articles of association, and the risks of operating without one.

art
  • 03 September 2026
  • Employment

Employment Rights Act – October Changes

We are well and truly underway with implementation of the Employment Rights Act 2025 (“ERA 2025”) and October brings the next tranche of changes that employers will need to be ready for.

art
  • 02 September 2026
  • Immigration

Mandatory MFA for Sponsor Management System Users: What Sponsors Need to Know

The Home Office is introducing a significant security change to the Sponsor Management System (SMS). From 3 September 2026, the Home Office will begin a phased rollout of mandatory Multi-Factor Authentication (MFA) for SMS users.