European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

Settling the legal effects of the transfer of undertaking, Article 3(1) of Directive No 2001/23 provides that, “the transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee”. However, “Member States may provide that, after the date of transfer,  …

Rules governing transfer of undertaking

Settling the legal effects of the transfer of undertaking, Article 3(1) of Directive No 2001/23 provides that, “the transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee”. However, “Member States may provide that, after the date of transfer, the transferor and the transferee shall be jointly and severally liable in respect of obligations which arose before the date of transfer from a contract of employment or an employment relationship existing on the date of the transfer”. It cannot be departed from the mandatory provisions of the directive in a way which is not favorable to employees' interests (Article 8). Accordingly, except in the event that the Member States choose to lay down a joint and several liability of the transferor and the transferee, the rights and obligations are automatically transferred to the transferee, who may not obstruct such transfer . 

The transfer extends to all the obligations of the transferor resulting from an employment contract or employment relationship, including those arising prior to the date of the transfer , such as unlawful terminations of contracts of employment . Even if, following the transfer, the transferee has the right, like the transferor, to adopt certain decisions with respect to the employee, for example regarding dismissal or the grant of early retirement, he must comply with the rights and obligations arising of the employment contract or employment relationship established with the transferor  but not the transferor's obligations with respect to third parties to the contract or employment relationship . The continued observance of the rights and obligations of the transferor arising from a contract of employment extends to the clause which the transferor and the worker agreed pursuant to the principle of freedom of contract, according to which their employment relationship is governed not only by the collective agreement in force on the date of the transfer, but also by collective agreements subsequent to the transfer supplementing it, modifying it or replacing it, if national law provides for the possibility for the transferee to make adjustments, which are both consensual and unilateral . Likewise, the obligation for the transferee to maintain, after the transfer, the working conditions agreed upon by a collective agreement does not extend to the provisions of a collective agreement which the transferor took on in respect of workers who were not employed by the undertaking at the time of the transfer , or subsequent to those that were in force at the time of the transfer of the business  or having expired concomitantly to the transfer . Moreover, the employees' rights to old-age, invalidity or survivors' benefits outside the statutory social security schemes in Member States are not transferred, unless the Member States provide otherwise (Article 3(4)). Early retirement benefits paid in the event of dismissal to employees who have reached a certain age, which do not identify to such benefits, are automatically transferred . 

Even though the obligation to maintain the employees' rights in principle prevents the transferee from altering the working conditions solely because of the transfer , national provisions may authorize it to make alterations, even substantial ones, where they are not motivated by the transfer and rely on other objectives . Alterations may, in particular, relate to the date of payment and the composition of wages , or to the calculation of the rights of a financial nature attached to employees' length of service, such as a termination payment or salary increases . This possibility is however restricted. A public entity may thus reduce the amount of the remuneration of the employees transferred for the purpose of complying with the national rules for public employees, provided that it takes the employee's length of service into account . Furthermore, pursuant to Article 4(2) of the directive, where the transfer involves a substantial change in the working conditions to the detriment of the employee, the possible termination of the contract will be regarded as being attributable to the employer . 

To avoid the rules protective of employees from being bypassed, the European court has laid down the principle according to which the transferor and the transferee could not contractually postpone the date of the transfer of the rights and obligations resulting from the employment contract , where that date is a particular point in time, concomitant to the transfer of undertaking, which cannot be fixed at the parties' will . Thus, workers dismissed with effect from a date prior to that of the transfer are regarded as still in the employ of the undertaking on the date of the transfer, where it is an established fact that the dismissal is intended to bypass the transfer of obligations to the new employer .

Unlike the transferee, the employee may always refuse his own transfer . Unless that refusal is motivated by a substantial change in his working conditions at the transferee's initiative, the termination of the contract will be regarded as being attributable to him  and he may not claim the maintenance of his contractual link with the transferor, who is discharged from its obligations  unless national law has chosen the joint and several liability provided for in Article 3(1) of the directive . 

Furthermore, the transferor and the transferee are required to inform in good time the representatives of the employees of the date or proposed date of the transfer, the reasons for the transfer, the legal, economic and social implications of the transfer, any measures envisaged in relation to employees . This obligation to inform is not only aimed at obtaining observations on the transfer of the undertaking, but also at seeking an agreement. Therefore, it applies even to employers who object to employee representation in their undertaking and includes highly deterrent sanctions . 

Case C-305/94 Rotsart de Hertaing v Benoidt and IGC Housing Service [1996] ECR I-5927, LawLex200900002148JBJ.

Case 135/83 Abels v Bedrijfsvereniging voor de Metaalindustrie en de Electrotechnische Industrie [1985] ECR 469, LawLex200900001540JBJ.

Case C-4/01 Martin and others [2003] ECR I-12859, LawLex200900000680JBJ.

Case 324/86 Tellerup v Daddy's Dance Hall [1988] ECR 739, LawLex200900002310JBJ: in principle, an employee cannot waive the protection established by the directive, the provisions of which are mandatory even where the new working conditions are globally more favorable, unless the alteration of those conditions is permitted by the national law in cases other than the transfer of an undertaking.

Case C-209/91 Rask and Christensen v ISS Kantineservice [1992] ECR I-5755, LawLex200900002088JBJ.

Case C-343/98 Collino and Chiappero [2000] ECR I-6659, LawLex200700001628JBJ.

Case C-425/02 Delahaye [2004] ECR I-10823, LawLex200900000786JBJ.

Case C-171/94 Merckx and Neuhuys v Ford Motors Company Belgium [1996] ECR I-1253, LawLex200900000714JBJ; C-399/96 Europièces v Sanders and Automative Industries Holding Company [1998] ECR I-6965, LawLex200900000678JBJ; C-425/02 Delahaye [2004] ECR I-10823, LawLex200900000786JBJ.

Case C-478/03 Celtec [2005] ECR I-4389, LawLex200900000952JBJ.

Case 101/87 Bork International v Foreningen af Arbejdsledere i Danmark [1988] ECR 3057, LawLex200900001438JBJ.

Case 144/87 Berg v Besselsen [1988] ECR 2559, LawLex200900001553JBJ; Case C-132/91 Katsikas and others v Konstantinidis and others [1992] ECR I-6577, LawLex200900000524JBJ; C-297/03 Sozialhilfeverband Rohrbach [2005] ECR I-4305, LawLex200900001429JBJ: a State entity which transfers its operations may not rely on Article 3(1) and Article 1(1)(c) of Directive No 2001/23 against an employee in order to force him to continue his employment relationship with a transferee.

Case C-319/94 Dethier Équipement v Dassy and Sovam [1998] ECR I-1061, LawLex200900001476JBJ: employees unlawfully dismissed by the transferor shortly before the undertaking is transferred and not taken on by the transferee may claim, as against the transferee, that their dismissal was unlawful.

Case C-399/96 Europièces v Sanders and Automative Industries Holding Company [1998] ECR I-6965, LawLex200900000678JBJ; See for an opposite ruling, C-425/02 Delahaye [2004] ECR I-10823, LawLex200900000786JBJ.

Case 144/87 Berg v Besselsen [1988] ECR 2559, LawLex200900001553JBJ; C-132/91 Katsikas and others v Konstantinidis and others [1992] ECR I-6577, LawLex200900000524JBJ.

Case C-51/00 Temco [2002] ECR I-969, LawLex200900001013JBJ.

Directive No 2001/23/EC, Article 7, 1 to 6.

Case C-382/92 Commission v United Kingdom [1994] ECR I-2435, LawLex200900000603JBJ.

Case C-313/07 Kirtruna and Vigano [2008] ECR I-7907, LawLex200900001131JBJ: Article 3(1) of Directive No 2001/23 does not, in the event of a transfer of an undertaking, require the preservation of the lease of commercial premises entered into by the transferor of the undertaking with a third party, even though the termination of that lease is likely to entail the termination of the contracts of employment transferred to the transferee.

Case C-680/15 Landsorganisationen I Danmark for Tjenerforbundet I Danmark, Judgment of 27 April 2017, LawLex201700001308JBJ.

Case 287/86 Landsorganizationen i Danmark for Tjenerforbundet i Danmark v Ny Mølle Kro [1987] ECR 5465, LawLex200900001499JBJ.

Case C-499/04 Werhof [2006] ECR I-2397, LawLex200900000988JBJ.

Case C-396/07 Juuri [2008] ECR I-8883, LawLex200900002281JBJ.

Case C-164/00 Beckmann [2002] ECR I-4893, LawLex200900000654JBJ; C-4/01 Martin and others [2003] ECR I-12859, LawLex200900000680JBJ.

European Business Law

208. Rules governing transfer of undertaking

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208. Rules governing transfer of undertaking

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise