Can You Divide An Employment Contract Between Multiple Transferees?

• Published date: 03 August 2020
• Subject Matter: Employment and HR, Contract of Employment
• Law Firm: Veale Wasbrough Vizards
• Author: Ms Eleanor Boyd

The European Court of Justice (ECJ) decision in ISS Facility Services v Govaerts is a significant departure from existing UK case law...

...relating to transfers under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).

Current UK Case Law

The Acquired Rights Directive is the European legislation from which TUPE is derived. Neither the Acquired Rights Directive or TUPE expressly confirms what should happen to an employment contract where there is a transfer of undertaking involving several transferees.

Kimberley Group Housing Ltd v Hambley and others is the leading case in the UK on this issue and suggests that employment contracts should transfer to the transferee taking on the majority of the activities. This interpretation of the Acquired Rights Directive has now been expressly rejected by the ECJ.

ISS Facility Services v Govaerts

ISS Facility Services had cleaning and maintenance contracts with the city of Ghent in Belgium. The work was divided into three lots and Ms Govaerts was employed by ISS as the project manager for all three lots. When the contracts were re-tendered, they were awarded to two new contractors, with one contractor taking lots one and three (which covered 85% of Ms Govaerts' work) and another taking lot two (which covered the remaining 15%). ISS informed Ms Govaerts that she would transfer to the contractor of lots one and three as these related to the majority of her work. However, the new contractor did not agree that the Acquired Rights Directive applied and terminated Ms Govaerts' employment.

Ms Govaerts brought claims against ISS and the new contractor for pay in lieu of notice, a pro-rata end of year bonus and leave pay. The Belgian courts found the Acquired Rights Directive applied. They asked the ECJ whether Ms Govaerts' employment should be split between each of the new contractors.

The ECJ held where the transfer of an undertaking involves multiple transferees, the employment contracts of the individual employees may be split proportionally between the transferees in accordance with the tasks performed by the employee. This is provided that the division of the employment contract does...