Kerry Underwood

EMPLOYMENT: TRANSFER OF UNDERTAKINGS: TWO NEW CASES

leave a comment »


Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Transfer to Multiple Transferees

In

ISS Facility Services NV v Govaerts and another Case C – 344/18 (ECLI:EU:C2020:239)

the European Court of Justice held that where there is a transfer of an undertaking involving a number of transferees, Article 3(1) of the Acquired Rights Directive means that the rights and obligations arising from a Contract of Employment are transferred to each of the transferees, in proportion to the tasks performed by the worker concerned.

This is subject to the condition that the division of the Contract of Employment as a result of the transfer is possible and does not cause a worsening of working conditions, nor adversely affect the safeguarding of the rights of workers guaranteed by the directive.

If such a division of the contract is impossible, or would adversely affect the worker’s right, then the transferees would be regarded as being responsible for any consequent termination of the employment relationship, under Article 4, even if that termination was initiated by the worker.

This is the first ruling on this point, and it is surprising that it has not arisen before.

United Kingdom law has previously held that an employee cannot be transferred to more than one employer, but that is no longer good law.

Here, Sonia Govaerts was employed by ISS as the project manager responsible for cleaning and maintenance of three lots of buildings in the city of Ghent.

When the three cleaning contracts were put out to tender, ISS were unsuccessful and two of the contracts were awarded to one company and one to another company.

The options were:

(i) that Ms Govaerts’ contractual rights and obligation were transferred to the transferees in proportion to the tasks she performed;

(ii) the transfer was solely to the transferee with whom she was to perform her principle tasks; or

(iii) the rights could not be asserted against either of the transferees.

That third option would previously have been the outcome under UK law.

In fact, the European Court of Justice went for the first option.

It is a matter for the referring domestic court to determine whether the Contract of Employment should be distributed in accordance with the economic value of the lots to which the work was assigned , or in accordance with the time that the worker spends on each lot.

 

Beneficial as Well as Detrimental Variation of Contract Void on Transfer

In

Ferguson and Others v Astrea Asset Management Ltd: UKEAT/0139/19/JOJ

the issue was whether Regulation 4(4) of the Transfer of Undertakings Regulations, which voids “any purported variation of a Contract of Employment” if the sole or principal reason for the variation is the transfer, applies to a variation which benefits the employee.

The Employment Appeal Tribunal found that it did and that a variation of a contract which improves the employee’s terms and conditions is void if the sole or principal reason for the variation is the transfer of an undertaking.

Obviously it does not prevent the parties subsequently agreeing an improvement, such  as an increase in pay, and just as in an employment relationship where there has been no transfer, an employee will invariably agree a beneficial change to the employment contract.

The facts here were unusual in that the controllers and employees of a business about to be transferred arranged for their contracts to be substantially improved so as to provide for guaranteed bonus payments and increased termination payments, but only if the transfer went ahead.

Such changes are known as “poison pills” and can be used by firms holding the contract so as to discourage bidders for the contract.

Here the transferee dismissed the employees for gross misconduct and the Employment Judge found that the new terms were not agreed for any legitimate commercial purpose and that the claimants were acting dishonestly.

Furthermore, the terms of the new contracts were void as it involved a variation by reason of the transfer.

The Employment Appeal Tribunal upheld that ruling and said that:

“…since the purpose of the Directive is to safeguard (and not to improve) the rights of employees which may otherwise be damaged by reason of a transfer, it seems reasonable to exclude positive as well as negative consequences of the transfer.”

Written by kerryunderwood

August 3, 2020 at 11:05 am

Posted in Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: