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
  • 03 June 2026
  • Employment

Holiday Pay Record Keeping – What this new duty means for employers

The Employment Rights Act 2025 made certain changes to the rules around holiday records, which came into effect on 6th April 2026.

art
  • 03 June 2026
  • Corporate and M&A

Is your Company’s Register of Members accurate? The hidden risks of getting it wrong

Ensure your company’s Register of Members is accurate and compliant. Learn the legal risks, common mistakes, and how to protect your business from penalties.

art
  • 02 June 2026
  • Corporate and M&A

Clarkslegal welcomes leading Corporate Law expert Mark Ridley as Partner

Clarkslegal is delighted to announce the appointment of Mark Ridley as a new Partner in the Corporate and Commercial team.

art
  • 28 May 2026

Newly rebranded legal services group Orwins makes investment in Clarkslegal

Orwins, the law firm for ambitious businesses and high net worth individuals, has today, 27 May 2026, announced a significant investment in Reading-based commercial law firm Clarkslegal.

art
  • 20 May 2026
  • Immigration

AI vs Home Office approved Translations – why migrants are paying the price

AI is transforming almost every professional sector. Law firms now use AI-assisted drafting, businesses rely on automated translation software, and governments increasingly use digital systems for decision-making.

art
  • 20 May 2026
  • Employment

Trade Unions Right of Access from October – What you need to know

Under the Employment Rights Act 2025, independent Trade Unions (i.e. those with a certificate of independence) will have a right to access workplaces (physically and digitally) from October 2026.