Background

The Supreme Court jurisprudence has traditionally declared that to consider an effective transfer of undertakings, in addition to the transfer of staff, it is necessary for a real transfer of assets to be executed. Regarding the issue of the transfer of staff, the Chamber has [specified the] European case law, in the sense that it must be “effective, peaceful and real”, and not a unilateral decision made by the employer.

Facts

A hospital outsourced their cleaning requirements and all staff assigned to the cleaning service transferred to the service company, without transfer of assets. The employees filed a claim before the Labour Court alleging that this assignment could not be considered a transfer of undertakings. In the current case the vast majority of the hospital’s employees challenged the transfer of undertaking, on the basis that it was not in accordance with the doctrine mentioned above as it could not be considered “peaceful”.

Effect on employers

Despite the doctrine of the European Court of Justice that a transfer of undertakings can take place if the whole staff is transferred, if a company is considering a possible transfer of undertakings it should bear in mind the restrictive criteria held by the Spanish Supreme Court. For the successful achievement of this transaction it is advisable that those assets assigned to the business are also transferred and included within the scope of the transaction in order to shape the business transferred as a real independent production unit.

Judgment of the Labour Chamber of the Supreme Court of 29 May 2008.