October 30, 2015

Integration Into a Group Company Can Trigger TUPE

In Ferreira da Silva e Brito v Estado portuges (C-160/14), the European Court of Justice (ECJ) considered whether there had been a “transfer of a business” and therefore whether the Portuguese equivalent of TUPE applied.

More than 90 employees were made redundant when a Portuguese airline was wound up. Shortly after, the airline’s majority shareholder, TAP, took over a number of its assets, including aircrafts, contracts, routes, offices, customers and some former employees. The redundant employees argued that this amounted to a “transfer of a business” under the Portuguese equivalent of TUPE, and therefore that their employment had transferred to TAP. The ECJ agreed. It said that the airline’s business had transferred to TAP for a number of reasons, and in particular (i) TAP continued the activities that the airline had previously carried out; (ii) TAP took over the assets of the airline that were essential for pursuing these activities; (iii) former customers of the airline had transferred to TAP; and (iv) former employees of the airline were assigned to roles they had previously undertaken. It was irrelevant that the airline’s business had been integrated into TAP’s structure and that it no longer had an autonomous organisational structure.

This case is a useful reminder that TUPE can apply where a number of assets are incorporated into another business, including into another group company. Businesses contemplating such transactions should seek legal advice at the earliest opportunity.

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