In ISS Facility Services NV v Govaerts, the ECJ has ruled that where a cleaning business was transferred to two transferees, the employment contract of an employee working for the whole transferring business was transferred and split between the transferees, as two part-time contracts, in proportion to the tasks performed by the employee (by economic value or time spent, as determined by the national court).  However, if the division of the contract of employment was not possible or caused a worsening of working conditions or adverse effect on the individual’s rights, then the transferees would be regarded as being responsible for any consequent termination of the employment relationship, whether that is an actual dismissal or the individual resigns and claims constructive dismissal.

Current UK law has not supported the idea of splitting contracts in this way, instead asking whether the individual can be said to be assigned to one of the transferees; if not, the individual will not transfer.  According to this new ECJ ruling, where a division of the contract between transferees is not possible (and there is no agreement that the employee continue to work for the transferor), then transferees would be exposed to the risk of unfair dismissal claims from those with 2 years’ service (and the dismissal may be automatically unfair as by reason of the transfer unless an ETO reason can be argued).

In the absence of ECJ guidance, there will obviously be scope for argument over when the division of a contract is “impossible” or worsens the individual’s working conditions or rights.  It is also unclear whether the same approach should be taken when a transferor transfers only part of its business and retains the rest and an employee works across both parts pre-transfer.  Prior to this ruling, an employee would only transfer if “assigned” to the part transferred immediately before the transfer.  However, it may now be possible to argue that an employee should be regarded as partly assigned so that part of their contract transfers.  The uncertainty highlights the importance of considering bundling employees pre-transfer and of ensuring appropriate indemnities are in place covering the risk of claims.

 

Anna Henderson
Anna Henderson
Professional Support Consultant, London
+44 20 7466 2819