Celtec Limited v Astley
Meaning of ‘date of a transfer’
The European Court of Justice (ECJ) has held that a transfer of an undertaking takes place on a particular date, and not over a period of time. The issue is important, especially in a Private Finance Initiative context where local authorities second staff to private sector partners, rather than transferring them under TUPE.
The court decided that the date of a transfer is a particular point in time when responsibility as employer for carrying on the business of the unit transferred moves from the transferor to the transferee. It follows that the date could not be postponed at the will of the transferor or the transferee. Contracts of employment or employment relationships existing on that date were deemed to be handed over from the transferor to the transferee, regardless of what had been agreed between the parties in that respect.
The facts of the case are well known. Celtec arose out of the establishment of Training and Enterprise Councils (TECs), which took over the management of training and enterprise facilities from the Department of Employment. This was treated as equivalent to a TUPE transfer. Staff for the TECs were seconded from the civil service for up to three years, when they had the choice of returning to the department, or resigning from the civil service and taking up employment with the TEC.
Applicants were seconded in September 1990 to a new TEC and resigned from the civil service to take up employment with the TEC in 1993. Whether they had continuity of employment depended on when the TUPE transfer took place. If, as the employment tribunal found, the transfer took place over a period of years via a series of transactions and was not complete until each employee seconded from the civil service was transferred, then the applicants were employed by the transferor in the undertaking at the time of transfer and their continuity of employment was preserved.
However, if September 1990 was the only time of transfer, then the applicant’s continuity of employment was not preserved as their employment had not transferred to the TEC at the date of the transfer.
That was the view of the EAT, on grounds that a transfer is completed when the new employer is “in actual occupation and control of the old business”. This was a rather harsh result for the employees, who continued doing the same work throughout the period. The Court of Appeal restored the employment tribunal’s decision. The case went on to the House of Lords, who referred it to the ECJ.
Under the Acquired Rights Directive, a transferor’s right and liabilities arising from a contract of employment existing on the date of transfer are transferred to the transferee. The ECJ gave no guidance on how the particular point in time is to be determined
TUPE currently provides that a transfer of an undertaking or part of one may be effected by a series of two or more transactions. It is not clear how this case affects that provision.
What you should do
Be aware that the ECJ’s judgment alone provides very little in the way of practical help. It is also unclear how this case might affect the provisions of TUPE, which expressly state that a transfer can be effected by a series of transactions. Given the lack of clear guidance from the ECJ on these issues, we’re really going to have to wait for the House of Lords’ decision to get some practical guidance.