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UK Employment Law Alert: 5 month 'gap' of activities did not prevent employee transfer

  • by Career Moves News
  • 6 Sep 2018

In domestic case law, it is already well accepted that a temporary cessation of activities does not preclude the existence of a TUPE (Transfer of Undertakings (Protection of Employment)) transfer.

Similarly, in the context of a service provision change, the ‘organised grouping of employees’ does not have to be engaged in the activity immediately before the transfer.

Although court ruling depends on situational circumstance, in each the purpose, nature, and length of the cessation are all relevant to determine the existence of the organised employee group. And in a Spanish case considered by the European Court of Justice (ECJ), the court ruled that a five-month cessation of company activities did not prevent an employee’s employment from transferring to an incoming contractor.

Facts

The claimant, Mr Colino Sigüenza, worked as a music teacher at a Spanish music school, owned by the local authority but operated by a private company (Musicos).

In April 2013, Musicos dismissed all staff and ceased activities at the school following a fall in attendee numbers and a dispute with the local authority.

The school reopened in September 2013 following a tender process in which a contract to operate the school was awarded to a new service provider In-pulso.

Mr Sigüenza and colleagues brought claims for unfair dismissal against all institutes, each of which failed. On appeal, the ECJ were to determine:

  • Whether there was a transfer of an undertaking
  • If so, were the dismissals in April for ‘economic, technical, or organisation’ (ETO) reasons detailing workforce changes, or were they caused by the transfer, therefore void?

Conclusion

The court ruled that a transfer of undertakings had not occurred, therefore there is no legal obligation for In-pulso to take on the existing staff from the music school as Musicos dismissed the workers well before In-pulso took over operation of the music school, due to an inability to pay staff.

These factors pointed towards European Court of Justice’s view that the ETO reasons for the dismissals, and In-pulso are not liable to hire Mr Sigüenza and colleagues.

Due to a change in service provider, the gap between the activities of the first and second provider, and the initial dismissal of the employees mean that the court has ruled the employees are not covered by TUPE.

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