In its judgment in Albron Catering v FNV Bondgenoten the European Court of Justice appears to have widened the scope of the Directive which forms the basis of the UK TUPE Regulations.

One of the key provisions of the Directive, and the TUPE Regulations, is that, where there is a relevant business transfer, the transferor's rights and obligations as employer in relation to any employee working in that business transfer, automatically to the transferee.

But what happens to workers in the business where the transferor is not their employer?

The general rule is that they do not have the protection of the TUPE Regulations.

The Albron case concerned employees who worked for one company (Heineken Nederland) but were employed by HNB, another company within the Heineken group, which performed the function of a central employer within that group.

Heineken Nederland then transferred its catering activities to Albron. The question was whether HNB's rights and obligations as employer of the employees performing those activities transfer to Albron with them?

The ECJ considered that they did.

ECJ said that where an undertaking or business within a group of companies is transferred to a business outside that group, it is possible to regard the group company to which the employees were permanently assigned as the 'transferor' for the purposes of the Directive, even though they had no contract of employment with that company and there was another company within the group which contractually employed them.

Points to note:

  • The ECJ seems to suggest that in such a situation both the employing company and the company to whom the employees are assigned can be regarded as the transferor.
  • In the UK, where one company within a group is contemplating such a transaction, it should take advice on the basis that the TUPE regulations may apply to another company within the group as well.
  • Although not directed at joint ventures this case may have implications for the employment and transfer of JV staff from now on.