Must you be directly employed by the transferor for your employment to transfer?

According to Regulation 4(1) of TUPE, the straightforward answer is yes. Regulation 4(1) says a relevant transfer will not terminate the employment contract of “any person employed by the transferor and assigned to the organised grouping of resources or employees subject to the relevant transfer”.

However, the Acquired Rights Directive (ARD) says something different. Article 3(1) of the ARD requires the employee to have either a “contract of employment or ... an employment relationship” with the transferor.

This was tested by the European Court of Justice (ECJ) in Albron Catering BV v FNV Bondgenoten and Roest Case C-242/09. The case involved the outsourcing by the Heineken Group of its catering division to an outside provider. Heineken Group employed all its staff through a central Heineken Group service company. As a result, although Roest, a catering operative, worked 100% of the time for the catering subsidiary, he was employed by the service company. Even so, the ECJ decided that when the catering business was outsourced, Roest’s employment contract also transferred, on the basis that although he was not directly employed by the catering subsidiary, he had an “employment relationship” with that part of the business. As a result he could insist that the outsourcing company honour the more advantageous terms and conditions paid by Heineken.