In a recent case, the European Court of Justice has ruled that, for the purposes of the Acquired Rights Directive, a change of service provider alone is not a transfer of an undertaking.

A local authority terminated its contract with an external cleaning company and continued to provide the service in house. It did not employ the cleaning company’s staff, which meant that no assets were transferred from the cleaning company to the local authority. Thus the ECJ held that the Directive did not apply.

Had this situation arisen in the UK, however, there would have been a relevant transfer under TUPE because Regulation 3(1) takes precedence over European law and provides that a mere change in service provider can trigger the transfer of an undertaking. In the UK, there does not need to be a transfer of assets or employees before there is a TUPE transfer

CLECE SA v Maria Socorro Martin Valor and Ayuntamiento de Cobisa