In a recent case, the European Court of Justice (ECJ) has considered what happens to the employment contract of a transferring worker where there is a transfer of an undertaking to multiple transferees. The ECJ held that the contract should be split in proportion to the tasks performed by the worker of the time devoted to those tasks. However, if the division of the contract is impossible or results in a deterioration in the working conditions and rights of the worker, the contract may be terminated.
The case involved an employee of ISS Facility Services in Ghent. ISS was responsible for the cleaning and maintenance of various buildings, divided into three lots. The employee was project manager of three areas of work corresponding to those lots. Following a tender exercise the lots were divided between two new contractors, Lots 1 and 3 (to which the employee was assigned up to 85% of her work) to one contractor and Lot 2 (to which she was 15% assigned) to the other. The employee was informed by ISS that as a result of the transfer of the undertaking she would become an employee of the first contractor. This was disputed and, following various proceedings, the referring court stayed proceedings, seeking an interpretation of the relevant articles of the Acquired Rights Directive 2001/23 (ARD). In particular it sought to ascertain whether, when a transfer of an undertaking occurs, within the meaning of Article 1(1) ARD, involving a number of transferees, the first paragraph of Article 3(1) of that directive must be interpreted as meaning that the rights and obligations arising from a contract of employment existing at the time of that transfer are transferred to each of the transferees, in proportion to tasks performed by that worker, or only to the transferee who acquired the lots on which the employee mainly performed the work. Alternatively the question was whether, in such circumstances, the rights under the contract of employment could not be asserted against either of the transferees.
The ECJ considered the purpose of the ARD which is to ensure, as far as possible, that the contract of employment continues unchanged with the transferee, in order to prevent the workers concerned from being placed in a less favourable position solely as a result of the transfer. However, in addition, while the interests of the employees must be protected, those of the transferee who must be in a position to make the adjustments and changes necessary to carry on his business cannot be disregarded. A transfer of the rights and obligations arising from a contract of employment to each of the transferees, in proportion to the tasks performed by the worker, makes it possible, in principle, to ensure a fair balance between protection of interests of workers and protection of the interests of transferees, since the worker obtains the safeguarding of the rights arising from his or her contract of employment, while the transferees do not have greater obligations imposed on them. This could therefore mean dividing a full time contract into different part-time contracts.
Having made that decision, the ECJ did state that it is for the referring court to take account of the practical implications of the division of the contract of employment in light of the objectives of the Directive. If the division of the contract is not possible or would adversely affect the rights of the worker, the employment relationship is terminated and the transferee would be regarded as having been responsible for the termination, even when that termination has been initiated by the worker.
The ARD is transposed into the UK by the Transfer of Undertakings (Protection of Employment) Regulations 2006. Under current UK case law, where there are multiple transfers then the contract of employment will transfer to the transferee for whom the individual is most closely linked, including a consideration of the time spent on the activities. If the UK does adopt the same approach then this could have significant implications for transferees where previously they would have been required to take on the employment related obligations of a full time employee. However, splitting an individual’s employment across multiple transferees is likely to result in an adverse effect on the employee’s position and the transferee(s) would be liable if the employment contract is terminated. In the UK such a termination would be automatically unfair unless the transferee could show that there was an economic, technical or organisational reason entailing changes to the workforce.