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
  • 06 January 2026
  • Commercial Real Estate

FAQ – Buying a commercial property in England and Wales

If you want to invest in the commercial property market in England and Wales (the two countries share the same jurisdiction), it is important to understand that the process differs significantly from buying a property in France.

art
  • 05 January 2026
  • Immigration

UK Immigration changes in 2025: What to expect in 2026

This wrap-up brings together the key developments from across the year, highlighting what has changed, what is still evolving, and what organisations should be planning for as we move into 2026.

art
  • 22 December 2025
  • Corporate and M&A

Corporate law in 2025 and looking forward to 2026

2025 has been a transformative year, with a massive paradigm shift from ‘deregulation’ to ‘transparency and accountability’ at Companies House.

Pub
  • 22 December 2025
  • Privacy and Data Protection

GDPR Packages

Our comprehensive GDPR Packages are designed to help organisations navigate the complexities of data protection and ensure compliance with regulatory requirements.

art
  • 18 December 2025
  • Employment

Employment Law: Looking back at 2025 and what to expect in 2026

2025 has certainly been an interesting year for employment law. While the Employment Rights Bill has pulled much of the focus since it was introduced in October 2024, there have been other important updates this year as well.

art
  • 18 December 2025
  • Corporate and M&A

Deal Announcement: Clarkslegal’s corporate lawyers advise on the sale of Chatterbox Labs Limited to subsidiary of American tech giant

Clarkslegal’s corporate team, led by Senior Consultant Jon Chapman and supported by Senior Solicitor Emma Docking, advised the founders of Chatterbox Labs Limited on the sale of the AI security specialist to Red Hat, Inc., a wholly owned subsidiary of IBM.