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

The objective of Directive No 2001/23 is to ensure to the transferred employees a situation as favorable as the situation they enjoyed before the transfer. The concept of employee is to be defined by the domestic law of each Member State, since the directive specifies that an employee is “any person who, in the Member State concerned, is protected as an employee under national employment law” (Article 2(1)(d)) . However, part time (Article 2(2)(a)), fixed-duration (Article 2(2)(b)) contracts of employment, as well as temporary employment relationships (Article 2(2)(c)) cannot be automatically excluded from the scope of the directive. Likewise, employees who enjoy some, albeit limited, protection against dismissal under national law, cannot be excluded from the protection of Directive No 2001/23 . By contrast, employees of the public sector cannot claim the benefit of the directive, when transferred to a private undertaking, unless originally they have been protected as employees under national employment law . Lastly, only contracts of employees assigned to the transferred portion of the undertaking are maintained in case of partial business transfer . 

Pursuant to Article 3 of the directive, the employee must further justify of that status on the date of the transfer. The date of the transfer is the date on which the responsibility as the employer for carrying on the business of the entity in question moves from the transferor to the transferee . Accordingly, employees who have already left the undertaking on the date of the transfer , or those who have been hired after that transfer , cannot rely on the rights and obligations under the transferred contracts of employment. By contrast, employees who were dismissed on a date close to the transfer of the undertaking, and who were taken on again immediately by the transferee, are to be considered to have been part of the staff of the transferred undertaking . 

Lastly, within the meaning of Article 1(c), it does not matter whether the transfer takes place in a public or private undertaking, as long as they operate an economic activity whether for gain or not. Therefore, the law of a Member State which refuses to award protection to employees transferred within an undertaking which operates an economic activity but without making profit, is contrary to the directive . The transfer by a non-profit making association governed by private law of an economic activity to a municipality , or the transfer for value, in the form of an administrative concession, by a public body within the State administration to a private-law company established by another public body which holds its entire capital , fall within the scope of application of the directive. By contrast, neither the administrative reorganization of public administration, nor the transfer of administrative functions between public administrative authorities constitute transfer of activities where these transactions relate only to activities involving the exercise of public authority .

For an application, see Case 105/84 Foreningen af Arbejdsledere i Danmark v Danmols Inventar [1985] ECR 2639, LawLex200900001457JBJ, which states that reference should be made to categories under national law to determine whether an employee of the transferor, who has become a shareholder and chairman of the board of directors of the transferee, may claim to be regarded as an employee.

Case 237/84 Commission v Belgium [1986] ECR 1247, LawLex200900001697JBJ.

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

Case C-298/94 Henke v Gemeinde Schierke and Verwaltungsgemeinschaft "Brocken" [1996] ECR I-4989, LawLex200900002141JBJ: the transfer ion question only related to activities involving the exercise of public authority, and any aspects of an economic nature could only be ancillary.

Case 186/83 Botzen Rotterdamsche Droogdok Maatschappij [1985] ECR 519, LawLex200900001628JBJ.

Case C-478/03 Celtec [2005] ECR I-4389, LawLex200900000952JBJ: the date which must be taken into account is the date on which responsibility as the employer for carrying on the business in question moves from the transferor to the transferee.

Case 19/83 Wendelboe v L.J. Music [1985] ECR 457, LawLex200900001634JBJ; 105/84 Foreningen af Arbejdsledere i Danmark v Danmols Inventar [1985] ECR 2639, LawLex200900001457JBJ.

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

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

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

Case C-175/99 Mayeur [2000] ECR I-7755, LawLex200700001606JBJ.

207. Scope of application ratione personae