The ECJ has ruled in Albron Catering BV v FNV Bondgenoten and another that where employees of a service company (A) are permanently assigned to another group company (B) the Acquired Rights Directive will treat the ‘non contractual’ employer, B, as the transferor. Article 3(1) of the ARD provides that ‘the transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee’. The ECJ held that this wording (and in particular the concept of ‘an employment relationship’) suggests that there need not be a contractual nexus between the transferor and the employees in order for the provisions of the ARD to bite.

Under UK legislation, the Transfer of Undertakings (Protection of Employment) Regulations 2006 implement the ARD but do not reflect the wording of a non contractual relationship. Regulation 4 states that there will be an automatic transfer of rights and obligations under or in connection with the contract of employment of any person ‘employed by the transferor’ and assigned to the organised grouping of transferring employees. This narrower wording appears to exclude the interpretation given by the ECJ in Albron. However, public sector workers can rely directly on the ARD and therefore apply the Albron decision. Further, in the context of private sector employers, courts and tribunals are under a duty to interpret domestic legislation purposively with the ARD and may if necessary add words into domestic law to make it read consistently with the Directive. We must wait to see how the courts address this issue.