TUPE can apply even after a business is closed for 5 months
A recent European Court of Justice (ECJ) case highlights that employers are not necessarily safe from TUPE even after a lengthy passage of time.
In Colino Sigüenza v Ayuntamiento de Valladolid, part of a Spanish music school was closed for 5 months due to poor performance by the contractor running the music lessons. After that period, a new contractor took over the provision of the service using the same premises, instruments and equipment.
TUPE (whose full title is the Transfer of Undertakings (Protection of Employment) Regulations 2006) applies when one service provider ceases to provide services which are then taken up by another provider. The regulations operate to protect the employees who were working on the first contract by allowing them to automatically transfer their employment to the new contractor, with their continuity of employment deemed uninterrupted.
There is no specified time limit under TUPE by when the new contractor must begin services in order for this protection to apply; however, the employer in this case argued that the contract had not been running for so long that the re-opening of the school amounted to an entirely new contract, not a transfer.
Some of the employees of the first contractor brought claims under TUPE, claiming that their employment should have automatically transferred to the new employer when the music lesson re-started and that they had therefore been unfairly dismissed.
The ECJ found that it was possible for TUPE to apply even after such a lengthy period of time. It also expressed the view that it might have been fair for the employees to be dismissed in any event as they could never have been paid by the old employer during the 5-month gap in the contract, but sent the case back to the Spanish courts on this question.
The case serves to remind employers of the complexity and far-reaching nature of TUPE and the importance of considering the employment law implications when a business closes or service comes to an end.