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

Pub
  • 07 May 2026
  • Employment

Employment Rights Act 2025: Key Changes for Employers

Join Katie Glendinning and Lucy White for a live webinar as they break down the key changes introduced by the Employment Rights Act 2025, offering clear insights into what these reforms mean in practice for employers and HR professionals.

art
  • 07 May 2026
  • Public Procurement

What the First Procurement Act 2023 Judgment Means for Automatic Suspension

It has been more than a year since the Procurement Act 2023 (PA23) came into force in February 2025, and the long wait for the first High Court judgment on the Act to be published is finally over.

art
  • 06 May 2026
  • Corporate and M&A

Community Interest Companies – What do you need to know?

This article seeks to provide an overview of the CIC structure’s key characteristics, the types of enterprises it suits, and some practical tips on the application process.

art
  • 06 May 2026
  • Privacy and Data Protection

Use of Personal Devices at Work: Why a Bring Your Own Device Policy is Essential

If you have employees who bring their own devices into the workplace and use said devices to deal with company data, you may want to consider a Bring Your Own Device (“BYOD”) policy.

art
  • 29 April 2026
  • Privacy and Data Protection

UK Data Protection – what’s new?

Having come into force on 19 June 2025, it comes as no surprise that we are now seeing the effects of the Data (Use and Access) Act 2025 (‘DUAA’). This article highlights a few of DUAA’s fundamental reforms, delves into one in particular, and examines how this will impact the recruitment sphere.

art
  • 29 April 2026
  • Employment

Employment Rights Act: Changing key contract terms will be harder from January 2027

The Employment Rights Act 2025 (“ERA 2025”) introduces a new regime that restricts how employers can change certain core contractual terms, with the key provisions now expected to commence on 1 January 2027.