You’ll probably be familiar with the basic effect of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (otherwise known as TUPE). Where a business transfers from one person to another, all the employees working within that business transfer as well, taking with them their existing terms and conditions.
But what happens if the business in questions shuts down for a period of time before the new ‘business owner’ takes over? Does this prevent a TUPE transfer from occurring? The recent Spanish case of Colino Sigüenza v Ayuntamiento de Valladolid considered the matter.
Mr Sigüenza was a teacher, working within a specialist music school. The school was privately managed, but funded by the local authority. The management company and the local authority fell into dispute and ultimately the company ceased trading, dismissing all its staff at the end of March 2013. The local authority subsequently went through a tendering process and appointed a new company to run the school with effect from August 2013. In the meantime, the school was closed.
When the new operator got up and running, it used the same premises, the same musical instruments and was granted access to the same resources as those previously used by the former operator. However, when it failed to appoint Mr Sigüenza (or any of his colleagues) to work at the school, Mr S brought claims under the Spanish equivalent of TUPE.
The case went to the European Court of Justice, which found in Mr S’s favour. Whilst the fact that the school was temporarily shut down at the time of the alleged transfer was a relevant factor when considering whether the Spanish equivalent of TUPE applied, the situation as a whole needed to be considered. The ECJ noted that the closure took place over the summer months, when the school would largely have been closed anyway. Furthermore, the ECJ was satisfied that it was possible to conclude that the business was effectively the same before and after the closure, given that the new operator was using all the same property and resources as the old one.
This case will now go back to the Spanish courts to consider whether Mr S’s dismissal was for a reason relating to the transfer or not. If the employees were dismissed because of the financial problems of the former operator, without any regard for whether and how any new operator might be appointed, it may be that they were dismissed quite lawfully. However, the Spanish courts will need to carefully consider the facts of the case and whether there is any evidence that the delay in the appointment of a new operator was a tactic employed specifically in order to avoid the law.
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