TUPE transfer where activities continue

07 October 2015

The TUPE Regulations apply to 'relevant transfers'. One type of relevant transfer is a business transfer - the transfer of an economic entity that retains its identity.

Ferreira da Silva e Brito & Others v Estado Portugues

The TUPE Regulations apply to 'relevant transfers'. One type of relevant transfer is a business transfer - the transfer of an economic entity that retains its identity.  It’s not always easy to tell whether identity has been retained and, therefore, whether workers are protected by TUPE. And that’s what this case was all about.

Air Atlantis (AA) was wound up, and Mr Brito and more than 90 other employees were dismissed via collective redundancy. They claimed reinstatement and pay after the company’s major shareholder (TAP) took over AA’s planes, lease contracts, routes, offices and equipment. TAP had also taken on a number of former AA employees.

The Court of Justice of the European Union (CJEU) disagreed with an earlier court decision that there was no transfer. Merely continuing a commercial activity didn’t by itself mean that a transfer had happened because the business also needed to retain its identity, the previous court had held. The CJEU held that AA’s operations were effectively continuing through TAP and identity had been retained. TUPE applied.

The transfer of tangible assets is a key factor in determining whether there has been a transfer of a business like AA. It was relevant here that TAP had taken over AA’s leases and used AA’s aircraft - these were essential to pursuing the activities that AA had previously carried on. The fact that TAP had taken over AA’s charter flight contracts indicated that it was dealing with AA’s customers. TAP had also taken on AA staff. And, the three-month gap between AA being wound up and TAP operating some of the charter flight business, meant that there was hardly any suspension of the activities.

Always a tricky area to deal with and, although we’ve got some broad rules, it’s one that will only ever be decided on the facts.


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