Administrador de Infraestructuras Ferroviarias (ADIF) v Aira Pascual and others

The ECJ has held that the Acquired Rights Directive (the Directive) covers the situation where a public railway authority takes back in-house the management of a rail freight service that had previously been outsourced to a private company using the public authority’s own equipment and facilities.

Facts

The Acquired Rights Directive’s purpose is to protect employee’s rights on a transfer of an undertaking. The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) implements this Directive in Great Britain.

Administrador de Infraestructuras Ferroviarias (ADIF) is a public undertaking which is responsible for the rail infrastructure in Spain. ADIF outsourced the handling of intermodal transport units (freight containers) to Algeposa. Algeposa provided the service for just over five years, using cranes and other equipment belonging to ADIF.

Before ADIF terminated the contract, it seconded some of its employees to Algeposa to complete an immersion training programme. Following this, ADIF informed Algeposa that it did not wish to extend the agreement and took back the service in-house with the intention of providing the service using its own staff. ADIF refused to take any of Algeposa’s staff.

Subsequently, Algeposa carried out a collective dismissal for economic reasons for several workers, including Mr Aira Pascual. He brought proceedings in a Spanish labour tribunal arguing that ADIF was obliged to take over his employment.

The tribunal granted his action and ADIF appealed to the High Court. The court referred the issue to the ECJ to determine whether the Acquired Rights Directive applied.

Outcome

The ECJ held that the Directive is capable of applying in the above situation. Specifically: where an organisation (the Client) that has procured a service (which, also, requires the contractor to use those resources which the Client owns), refuses to take over the rights and obligations relating to employees when it decides not to extend the contract but to provide the service itself, using its own staff and without taking over the staff employed by the contractor.

The Directive is capable of applying to the insourcing of a previously outsourced service. The fact that the transferee is a public body is not a ground for excluding the Directive. A multifactorial approach should be adopted when deciding whether there is an economic entity which retains its identity; no one factor can be considered in isolation.

Where an activity is based essentially on manpower, the identity of the economic entity cannot be retained if the majority of the employees are not taken on by the transferee. However the activity in this case cannot be regarded as an activity based essentially on manpower, since the service in question requires significant amounts of equipment. Therefore, the fact that ADIF did not take over any of Algeposa’s employees did not prevent there being a transfer.

The ECJ has previously held that the transfer of the ownership of the assets is not necessary for there to be a relevant transfer (Abler v Sodexho MM Catering Gessellschft mbG). Therefore the Directive could still apply even though in this case the tangible assets essential to the activity were owned at all times by ADIF, the transferee.

The court concluded that it is for the national court to determine whether, taking account of all the facts, there is a transfer.

Points to note

This case highlights that for situations where there is a change in the organisation responsible for the provision of a service, the Directive (and, therefore, TUPE) may still apply where there  is no actual transfer of the ownership of assets or employees. In addition, under TUPE there is the alternative “service provision change” test, where the focus is on the nature of the service, ignoring assets.