TUPE : When a transfer splits the employee…
The transfer of undertaking has given rise to a significant amount of case law, both in Belgium and on a European level. The Belgian regulations on the subject, as determined in the national collective bargaining agreement n° 32bis, are based on the European directive 2001/23.
The principle of both cba n° 32bis and directive 2001/23 is well known : in the event an undertaking, business or part thereof is transferred, the transferor’s rights and obligations arising from an employment contract existing on the date of a transfer are transferred to the transferee. This principle aims at the safeguarding of employees’ rights, allowing them to continue their employment under the same terms and conditions.
In the majority of the cases, the transferor hands over its business or activities to only one transferee. However, the question arises what happens if the activities that, within the organization of the transferor, originally were executed by one employee, are continued by multiple transferees.
Facts giving rise to the ECJ decision
The European Court of Justice recently had to consider this question in the ISS/Govaerts case (C-344/18). Mrs Govaerts was employed by cleaning company ISS, that was responsible for the cleaning and maintenance of various buildings in the city of Ghent, divided into three lots. Mrs Govaerts was project manager of the three areas of work corresponding to those lots. When the contract between ISS and the city of Ghent came to an end, a tender was issued with regard to the three lots. Although ISS participated, its tender was unsuccessful. Lots 1 and 3 were awarded to its competitor Atalian, while lot 2 was awarded to another competitor, Cleaning Masters.
The moment that ISS no longer rendered services for the city of Ghent, the question arose what had to happen with the employment contract of Mrs Govaerts. ISS believed that her employment transferred to Atalian, in application of cba n°32bis, a position that was protested by Atalian. As none of the companies continued to employ Mrs Govaerts, the latter initiated legal proceedings to claim the payment of an indemnity in lieu of notice of both ISS and Atalian.
In the first place, Atalian contested that Mrs Govaerts was part of the transferred entity, a position that was not followed by the Higher Labour Court of Ghent, as the tasks assigned to Mrs Govaerts related exclusively to the city of Ghent areas of work. However, discussion then began how the employment contract of Mrs Govaerts could be transferred, as Atalian only acquired two of the three lots to which the activities of Mrs Govaerts were related. The Labour Court decided to ask the European Court of Justice to clarify the matter.
ECJ Decision of 26 March 2020
In its judgement of 26 March 2020, the European Court of Justice recalls that, although the European directive 2001/23 is intended to safeguard the rights of the employee in the event of a change of employer, the interests 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 fair balance thus should be found between the interests of the employees, on the one hand, and those of the transferee, on the other.
For that reason, the Court rejects the suggestion of the High Labour Court of Ghent that the employee could be transferred on a full-time basis to the transferee for whom the employee would perform his or her principal tasks. The European Court thus follows the argumentation of Atalian that this possibility would force the transferee to provide a full-time employment although the employee concerned is to perform his or her tasks with that transferee only part-time.
The European Court therefore opts to follow the Labour Court’s second suggestion, i.e. that the employee’s contract is transferred to each of the transferees in proportion to the tasks performed by the worker, to the extent that such division of the contract is possible and neither causes a worsening of working conditions nor adversely affects the safeguarding of the rights of workers guaranteed by the directive. Insofar as such a division would be impossible or would adversely affect the rights of the employee, the transferees will be considered liable for the termination of the employment contract.
This decision of the European Court of Justice will not always be easy to apply in practice.
After all, both the employee and the transferees will be confronted with significant practical issues, while attempting to reconcile the part-time work schedules, vacation days etc. within the different companies and the employee’s personal life.
Moreover, specifically for Belgium, the forced part-time employment may lead to a violation of law. We recall that Belgian legislation imposes that a part-time employment should at least correspond to 1/3 of a full-time employment. Therefore, in the event the activities of the employee would be transferred to four different transferees, the employee would be employed by each transferee for an employment of 25 %, which is below the Belgian minimum threshold.
It can therefore be expected that, in practice, the application of the Court’s interpretation of a prorated transfer to each transferee will appear impossible or will be considered to adversely affect the employee’s rights. In accordance with the judgement of the Court, the employment contract will thus be deemed to be terminated by the transferee(s), obligating the transferee(s) to pay an indemnity in lieu of notice to the employee concerned.
Companies are therefore recommended to investigate with care which employees would fall within the scope of the intended transfer of undertaking and to what extent. A wise transferee will ensure to make contractual arrangements with the transferor on the financial and legal implications of such potential dismissal.
Yne Machiels & Stefaan Diels