Judgment — ECLI:EU:C:1998:594
Date: 1998-12-10
Language of the case: German;Spanish
Court formation: Fifth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Social Policy
Concepts: Employment protection and protection of employees in the event of the insolvency of their employer
Procedure: Reference for a preliminary ruling
Origin: Germany;Spain

Summary
I — Introduction I-8182
II — The relevant Community provisions I - 8182
III ·—The relevant national provisions I - 8183
A — The provisions of German law I - 8183
B — The provisions of Spanish law I - 8184
IV—-The facts and the questions referred by the national court 1-8185
A — Joined Cases C-127/96, C-229/96 and C-74/97 I - 8185
(1) Case C-127/96, Hernández Vidal I- 8185
(2) Case C-229/96, Friedrich Santner I-8186
(3) Case C-74/97, Gómez Montana I - 8187
B — Joined Cases C-173/96 and C-247/96 I - 8188
(1) Case C-173/96, Sánchez Hidalgo I - 8188
(2) Case C-247/96, Horst Ziemann I- 8190
V ·—• The answers to the questions referred by the national court I-8193
A — The need to answer the questions I - 8193
B — The case-law of the Court I - 8193
C —Joined Cases C-127/96, C-229/96 and C-74/97 I- 8201
(1) Case C-127/96, Hernández Vidal I - 8201
(2) Case C-229/96, Friedrich Santner 1-8205
(3) Case C-74/97, Gómez Montaña I - 8207
D — Joined Cases C-173/96 and C-247/96 I - 8208
(1) Case C-173/96, Sánchez Hidalgo I - 8208
(2) Case C-247/96, Horst Ziemann I- 8210
VI —Conclusion I - 8217
* Original language: Greek.
I-8181
OPINION OF MR COSMAS — JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
I — Introduction
1. In the present cases, the Court has been
asked to interpret certain provisions of
Council Directive 77/187/EEC of 14 Feb­
ruary 1977 on the approximation of the laws
of the Member States relating to the safe­
guarding of employees' rights in the event of
transfers of undertakings, businesses or parts
of businesses 1 (hereinafter 'the Directive').
2. The questions raised in these cases have
for the most part already been settled, mainly
in the recent judgment delivered by the Court
in Süzen. 2
3. With regard to the first three joined cases,
however, it must be pointed out that the
Court had never had occasion to rule on a
case in which one undertaking, having
entrusted the cleaning of its premises to
another, decides to terminate the contract and
take over the cleaning operation itself (resump­
tion in-house).
4. The other two joined cases are also con­
cerned with the problem of undertakings suc­
ceeding one another in the performance of an
activity. In Case C-247/96 Horst Ziemann,
however, it will be necessary to consider the
concept of a transferable economic entity.
II — The relevant Community provisions
5. It is clear from the second recital in the
preamble to the Directive 3 that the purpose
of the Directive is 'to provide for the protec­
tion of employees in the event of a change of
employer, in particular, to ensure that their
rights are safeguarded'.
6. In Section 1, which defines the scope of
the Directive, Article 1 provides that it 'shall
apply to the transfer of an undertaking, busi-
1 — OJ 1977 L 61, p. 26.
2 — Case C-13/95 Ayse Süzen v Zehnacker Gebäudereinigung
[1997] ECR 1-1259. By the two questions referred to the
Court in that case, which were considered together, the
national court sought to ascertain whether the directive also
applies to a situation in which an employer who has entrusted
the cleaning of his premises to a first undertaking terminates
his contract with the latter and, for the performance of the
same work, enters into a new contract with a second under­
taking without any concomitant transfer of tangible or intan­
gible business assets from one undertaking to the other.
3 — The Directive has recently been amended in the light of the
case-law of the Court inter alia. The amendments are embodied
in Council Directive 98/50/EC of 29 June 1998, OJ 1998
L 201, p. 88.
I-8182
HERNÁNDEZ VIDAL AND OTHERS
ness or part of a business to another employer
as a result of a legal transfer or merger'. 4
7. In Section 2 of the Directive, which is
entitled 'Safeguarding of employees' rights',
Article 3(1) provides that 'the transferor's
rights and obligations arising from a contract
of employment or from an employment rela­
tionship existing on the date of a transfer ...
shall, by reason of such transfer, be trans­
ferred to the transferee'.
8. Under Article 4(1), 'the transfer of an
undertaking, business or part of a business
shall not in itself constitute grounds for dis­
missal by the transferor or the transferee. This
provision shall not stand in the way of dis­
missals that may take place for economic,
technical or organisational reasons entailing
changes in the workforce'.
9. Finally, under Article 7, Member States
retain the right to apply or introduce mea­
sures which are more favourable to employees.
III — The relevant national provisions
A — The provisions of German law
10. The Directive was transposed into
German law by § 613a of the Bürgerliches
Gesetzbuch (German Civil Code, hereinafter
'BGB'), which provides as follows:
'Rights and obligations in the event of trans­
fers of businesses
1. When a business or part of a business is
transferred to another owner as a result of a
legal transaction, that owner shall take over
the rights and obligations arising from the
4 — Article 1(1) as amended by Directive 98/50 reads as follows:
'(a)This Directive shall apply to any transfer of an under­
taking, business, or part of an undertaking or business to
another employer as a result of a legal transfer or merger.
(b)Subject to subparagraph (a) and the following provisions
of this Article, there is a transfer within the meaning of this
Directive where there is a transfer of an economic entity
which retains its identity, meaning an organised grouping of
resources which has the objective of pursuing an economic
activity, whether or not that activity is centraler ancillary.
(c)This Directive shall apply to public and private undertak­
ings engaged in economic activities whether or not they arc
operating for gain. An administrative reorganisation of public
administrative authorities, or the transfer of administrative
functions between public administrative authorities, is not a
transfer within the meaning of this Directive.'
I-8183
OPINION OF MR COSMAS —JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
employment relationship existing on the date
of the transfer ...' 5
11. § 613a BGB also contains the following
provisions:
'2. The former employer shall be jointly and
severally liable with the new owner in respect
of the obligations referred to in paragraph 1,
in so far as such obligations arose before the
date of the transfer and fall to be met within
a year of that date. However, where such
obligations fall to be met after the date of the
transfer, the former employer shall be liable
only in respect of the period before the date
of the transfer.
3. ...
4. Termination of an employee's employment
relationship by the former employer or the
new owner because of the transfer of a busi­
ness or part of a business shall be null and
void. The right to terminate the employment
relationship on other grounds shall remain
unaffected.'
B — The provisions of Spanish law
12. The Directive was transposed into Spanish
law by Article 44 of the Estatuto de los Tra­
bajadores (Labour Relations Regulations), 6
which provides that:
'1 . The transfer of an undertaking, business
or independent production unit of a business
shall not in itself terminate the employment
relationship, as the new employer takes over
the former employer's rights and obligations
with respect to employment. ...
2. ...'.
5 — The same provision continues: 'Where those rights and obli­
gations are governed by the provisions of a collective agree­
ment or company agreement, they shall be incorporated in
the employment relationship between the new owner and the
employee, and may not be altered in a manner unfavourable
to the employee within a year of the date of the transfer. The
second sentence shall not apply if the rights and obligations
under the new owner are governed by the provisions of a dif­
ferent collective agreement or company agreement. The rights
and obligations may be altered before the expiry of the period
specified in the second sentence if the collective agreement or
company agreement ceases to apply or if the terms of another
collective agreement, which the new owner and the employee
agree is applicable, are not binding on both parties.'
6 — Approved by Real Decreto Legislativo (Royal Legislative
Decree) No 1/1995 of 24 March, Boletín Oficial del Estado
(Official Gazette, hereinafter 'BOE') of 29 March 1995.
I-8184
HERNÁNDEZ VIDAL AND OTHERS
IV — The facts and the questions referred by
the national court
A —Joined Cases C-127/96, C-229/96 and
C-74/97
(1) Case C-127/96, Hernández Vidal
13. Prudencia Gómez Pérez and María
Gómez Pérez were employed for many years
by Contratas y Limpiezas, SL (hereinafter
'Contratas y Limpiezas'), a company engaged
in the business of cleaning buildings and pre­
mises. Both are cleaners.
14. They were assigned to cleaning duties at
the premises of Francisco Hernández Vidal,
SA (hereinafter 'Hernández Vidal'), a com­
pany engaged in the manufacture of sweets
and chewing gum, pursuant to a cleaning
contract concluded between Contratas y
Limpiezas and Hernández Vidal.
15. That contract, concluded on 1 Jan­
uary 1992 7 and renewable annually, was ter­
minated on 2 January 1995 by Hernández
Vidal, which wished to take over the cleaning
of its premises itself and engaged new staff
for the purpose. 8 Neither that company nor
Contratas y Limpiezas wished to continue
the employment relationship with Prudencia
and María Gómez Pérez after that date. 9
16. The two women brought an action for
unlawful dismissal against the two companies
before the Juzgado de lo Social No 5 (Social
Court No 5), Murcia. By judgment of 23
March 1995, that court upheld the claim
against Hernández Vidal only and ordered it
to re-employ the two women or to pay them
damages and to pay their wages for the period
from the date of dismissal to the date of ser­
vice of the judgment.
7 — During the oral procedure, Prudencia and Maria Gómez Pérez
stated that they had worked for Hernández Vidal since 1983
and 1987 respectively and that a new contract had been con­
cluded with that company in 1992.
8 — During the oral procedure Prudencia and María Gómez Pérez
stated that, after taking over the cleaning of its premises itself,
Hernández Vidal had engaged new staff, who had been shown
their duties by the plaintiffs.
9 — As Hernández points out (point II.3 of its written observa­
tions), under Spanish law, the transfer of the business of
cleaning buildings and premises is subject to special provi­
sions that arc highly favourable to employees. The provisions
in question are set out in Article 13 of the Ordenanza Laboral
para Limpieza de Edificios y Locales (Order relating to
workers employed in the cleaning of buildings and premises),
approved by administrative order of 15 February 1975 extended
by administrative order of 28 December 1994, and Article 37
of the Convenio Colectivo para Limpieza de Edificios y
Locales de la Región de Murcia (collective agreement cov­
ering workers employed in the cleaning of buildings and pre­
mises in the Region of Murcia).
Article 13 of the Ordenanza provides that, when an under­
taking in which cleaning services have been provided by a
contractor takes over those services itself, it is not obliged to
keep on the staff who provided the services on behalf of the
contractor if it employs its own staff to do the cleaning. It
must, however, do so if it wishes to employ new staff to do
the cleaning. Article 13 also provides that employees of a con­
tractor providing cleaning services, whose employment rela­
tionship with that contractor is broken when the contract
expires, arc to be taken on by the new contractor.
Article 37 of the Convenio Colectivo provides that, on the
expiry of a contract for cleaning services, staff employed by
the outgoing contractor must be taken on by the new con­
tractor, who takes over all the rights and obligations of his
predecessor.
I-8185
OPINION OF MR COSMAS—JOINED CASES C-127/96, C-229/96 ANDC-74/97 ANDJOINED CASES C-173/96 AND C-247/96
17. Taking the view that no transfer of a
business or part of a business had taken place
and that it could not therefore be held to be
a transferee, Hernández Vidal appealed against
that judgment to the Tribunal Superior de
Justicia (High Court of Justice), Murcia.
18. Considering that the outcome of the case
depended on the interpretation of the Direc­
tive, the Sala de lo Social (Chamber for Social
Matters) of the Tribunal Superior de Justicia,
Murcia, referred the following questions to
the Court for a preliminary ruling:
'1 . Is the work of cleaning the premises of an
undertaking whose main business is not
cleaning, being in this case the production
of chewing gum and sweets, but which
has a permanent need for that secondary
activity "part of a business"?
2. May the term "legal transfer" cover the
termination of a mercantile contract for
the provision of cleaning services, after
three years, with annual renewals, at the
end of the third year, by decision of the
undertaking hiring the services; if that is
the case, may it depend on whether the
undertaking hiring the services carries out
the cleaning using its own workers or using
workers under a new contractual arrange­
ment?'
(2) Case C-229/96, Friedrich Santner
19. From 1980 Friedrich Santner was
employed as a cleaner, first by
Dörhöffer+Schmitt GmbH (hereinafter
'Dörhöff er+Schmitť) and then by B+S GmbH
(hereinafter 'B+S'), which was created after
the business of Dörhöffer+Schmitt was split
up.
20. Mr Santner was engaged solely in cleaning
the bathhouses of Hoechst AG (hereinafter
'Hoechst') under cleaning contracts which
Hoechst had concluded with each of the two
aforementioned companies in turn.
21. However, Hoechst terminated its con­
tract with B+S and reorganised the cleaning
of its bathhouses. It now does the cleaning
itself, partly using its own workers and partly
in cooperation with other outside firms.
22. On 27 April 1995, B+S terminated its
employment relationship with Mr Santner.
I-8186
HERNÁNDEZ VIDAL AND OTHERS
Mr Santner took the view that a transfer of an
undertaking had occurred and that his employ­
ment relationship should be continued with
Hoechst. He therefore brought an action
against the company before the Arbeitsger­
icht (Labour Court) Frankfurt am Main.
23. Considering that the outcome of the case
depended on the interpretation of the Direc­
tive, that court referred the following ques­
tions to the Court for a preliminary ruling:
'1 . Where, following termination of the legal
transfer to an outside firm of the cleaning
operations of individual parts of a busi­
ness, those operations are again carried
out by the undertaking itself, can they be
treated as part of a business within the
meaning of Directive 77/187/EEC?
2. Is the position the same where, following
their retransfer to the undertaking, those
cleaning operations of individual parts of
the business are re-merged into the cleaning
operations of the business as a whole?'
(3) Case C-74/97, Gómez Montaña
24. The Red Nacional de los Ferrocarriles
Españoles (Spanish National Railways, here­
inafter 'Renfe') had awarded a contract to the
cleaning company Claro Sol SA (hereinafter
'Claro Sol') for the cleaning and maintenance
of Pontevedra railway station for the period
16 October 1994 to 15 October 1996.
25. After winning that contract, Claro Sol
had engaged Mercedes Gómez Montaña and
assigned her to the cleaning and maintenance
of that station.
26. For a number of years previously,
Mrs Gómez Montaña had been an employee
of the cleaning companies that preceded Claro
Sol.
27. At the end of the contractual period,
Renfe decided not to renew the contract with
Claro Sol and to take over the cleaning and
maintenance of Pontevedra railway station
itself.
28. On 1 October 1996, Claro Sol informed
Mrs Gómez Montaña that the employment
relationship between them would terminate
on 15 October 1996, when the contract
between Renfe and Claro Sol expired.
I-8187
OPINION OF MR COSMAS — JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
29. Mrs Gómez Montaña brought an action
for unlawful dismissal against Claro Sol and
Renfe 10 before the Juzgado de lo Social No
1 (Social Court No 1), Pontevedra.
30. The national court notes that, in cases of
this kind, the case-law generally considers
that Article 44 of the Estatuto de los Traba­
jadores is not applicable, since what is involved
is the termination of a contract for works or
services covered by Article 42 of the
Estatuto. 11
31. Considering that the outcome of the case
depended on the interpretation of the Direc­
tive, that court referred the following ques­
tion to the Court for a preliminary ruling:
'Does Directive 77/187/EEC of 14 February
1977 cover circumstances in which the termi­
nation of a contract with a cleaning company
results in the dismissal of the worker employed
by the contractor and the cleaning is taken
over by the principal, a railway transport
undertaking, using its own employees?'
B —Joined Cases C-173/96 and C-247/96
(1) Case C-173/96, Sánchez Hidalgo
32. The Municipality of Guadalajara had con­
tracted out its home-help service for persons
in need to the Sociedad Cooperativa Minerva
(Minerva Cooperative Society, hereinafter
'Minerva') which, for this purpose, had been
employing Francisca Sánchez Hidalgo and
four other employees as home helps for sev­
eral years.
33. On the expiry of the contract, the munici­
pality entrusted the service in question to the
Asociación de Servicios al Minusválido Aser
(Association of Services for the Disabled, here­
inafter 'Aser') as from 1 September 1994.
10 — Article 6(1) of the Texto Final del XIV Convenio Colectivo
de 'Contratas Ferroviarias 1994' (Final Text of the Four­
teenth Collective Agreement on Railway Contracts 1994
(BOE of 25 January 1995, No 21, point 217)) provides that
a new undertaking which replaces the previous contractor
must take on the staff employed at the workplace affected
by the transfer and assume the rights and obligations arising
from the existing employment relationship. Under Article
23(1) of the Convenio Colectivo de Limpieza de Edificios y
Locales de Pontevedra (Collective Agreement on the Cleaning
of buildings and premises in Pontevedra, Informacion Laboral
1996, No 4090, p. 8586), on expiry of the cleaning contract,
the workers of the outgoing undertaking must be taken on
by the new contractor, who must assume all the rights and
obligations of the previous employer if any of the condi­
tions specified in that provision is fulfilled. Article 23(3)
provides that this does not apply in the case of a contractor
who is carrying out the cleaning for the first time and has
not concluded a maintenance contract.
11 — On the subject of the expiry of contracts for works or ser­
vices, Article 42 of the Estatuto provides that 'the principal
... shall be jointly and severally liable, for a period of one
year following completion of the work contracted out, for
the performance of obligations relating to the payment of
salaries and/or wages and social security contributions entered
into by the contractors with their employees during the
period for which the contract remains in force, such liability
being limited, however, to that which would have existed if
the situation had involved his own employees engaged in the
same working categories or posts'.
I-8188
HERNÁNDEZ VIDAL AND OTHERS
34. Aser then concluded a new contract with
Mrs Sánchez Hidalgo and the other four
employees for the same services on a part-
time basis but did not recognise their period
of service with the previous undertaking.
35. Taking the view that the refusal to take
into account their previous service constituted
an infringement of Article 44 of the Estatuto
de los Trabajadores, the five employees
brought proceedings before the Juzgado de lo
Social (Social Court), Guadalajara, for a dec­
laration that their employment relationship
with Minerva had been taken over by Aser.
36. That court decided that the conditions
for the transfer of an undertaking within the
meaning of the national legislation were not
met and dismissed their action by judgment
of 6 July 1995.
37. Mrs Sánchez Hidalgo and the other four
employees appealed against that judgment to
the Tribunal Superior de Justicia (High Court
of Justice) Castilla-la Mancha.
38. In its order for reference, the national
court states that, according to the case-law of
the Tribunal Supremo (Supreme Court), 12 the
protection conferred on employees by Article
44 of the Estatuto de los Trabajadores is
applicable only where one of the following
circumstances obtains: (a) there is a transfer
of material assets from one contracting under­
taking to another; 13(b) that effect is provided
for by the rules applicable to the sector (at
present, only the collective agreement); (c)
there is a specific provision to that effect in
the conditions governing tenders for the new
contract. However, the national court con­
siders that none of those circumstances obtain
in the present case.
39. The national court observes that, although
there appears to be no essential difference
between the literal tenor of the two provi­
sions (Community and national) as regards
the scope of the harmonising Community
provision and the domestic provision which
transposes it, nevertheless the interpretation
of those provisions which is being developed
by Spanish and Community case-law does
appear to differ as regards the application of
that legislation to certain cases such as the
one now before the court, where successive
contracts have been awarded to different
undertakings for the provision of a service for
a given principal, whether it be public — as
it is in most cases — or private.
12 — Judgment of the Tribunal Supremo of 14 December 1994.
13 — The national court explains that the legal protection pre­
scribed for cases where one undertaking succeeds another is
not available where what occurs is that a different under­
taking is made responsible for carrying out an activity,
without any transfer of assets.
I-8189
OPINION OF MR COSMAS—JOINED CASES C-127/96, C-229/96 AND C-74/97 ANDJOINED CASES C-173/96 AND C-247/96
40. The national court's doubts stem from its
impression that the Court considers that the
Directive is applicable when there is merely a
succession in the exercise of an activity, regard­
less of whether there has been a transfer of
assets. 14
41. Considering that the outcome of the case
depended on the interpretation of the Direc­
tive, the Social Chamber of the Tribunal Supe­
rior deJusticia de Castilla-La Mancha referred
the following question to the Court for a pre­
liminary ruling:
'Where an undertaking ceases to provide, for
a municipality which had awarded it a con­
tract for this purpose, a home-help service for
certain persons in need, and which then awards
a new contract for that service to a different
undertaking, without there being any transfer
of material assets and without there being,
either in the collective agreement or in the
tendering conditions, any provision pursuant
to which the new undertaking must be sub­
rogated to the employment relationship
between the workers and the previous under­
taking to which the contract had been awarded,
is this case to be regarded as falling within the
scope of Article 1(1) of Directive 77/187/EEC
of 14 February 1977?'
(2) Case C-247/96, Horst Ziemann
42. Horst Ziemann had been continuously
employed from 1979 to 1995 as a security
guard at a medical supplies depot of the
Bundeswehr (Federal Armed Forces) at
Efringen-Kirchen. During that period he was
employed by each in turn of the five security
companies successively responsible for main­
taining site security at the depot. Most recently,
from 1990 to 1995, responsibility for this
activity had passed to Ziemann Sicherheit
GmbH (hereinafter 'Ziemann Sicherheit').
43. On 30 September 1995, the Bundeswehr
terminated the contract with Ziemann Sicher­
heit and, following an invitation to tender,
awarded it to Horst Bohn Sicherheitsdienst
(hereinafter 'Horst Bohn').
44. Horst Bohn took on the Ziemann Sicher­
heit personnel serving at the depot, with the
exception of three employees, one of whom
was Mr Ziemann.
45. Ziemann Sicherheit, which employs about
160 people to guard other establishments as
well, many of which, however, are far away
14 — The court refers, in particular, to Case 324/86 Daddy's Dance
Hall [1988] ECR 739, Case C-29/91 Redmond Stichting
[1992] ECR I-3189 and Case C-392/92 Schmidt [1994] ECR
I-1311.
I-8190
HERNÁNDEZ VIDAL AND OTHERS
from the Efringen-Kirchen depot, terminated
Mr Ziemann's employment contract with
effect from 30 September 1995.
46. On 9 October 1995,Mr Ziemann brought
an action before the Arbeitsgericht (Labour
Court) Lörrach to have his dismissal declared
unlawful. Specifically, he claimed that the ter­
mination of the contract for protecting the
Bundeswehr medical supplies depot at
Efringen-Kirchen and the award of that con­
tract to Horst Bohn amounted to a transfer
of part of a business within the meaning of §
613a BGB, paragraph 1, and Directive
77/187/EEC and that Ziemann Sicherheit had
dismissed him for reasons related to that
transfer, in breach of § 613a BGB, paragraph
4.
47. The two undertakings, Ziemann Sicher­
heit and Horst Bohn, argued that no transfer
of a business could have occurred in this case
because there was no legal relationship
between them.
48. According to the Arbeitsgericht, it appears
from the case-law of the Court, in particular
the judgment in Schmidt, 15 that the Directive
is applicable whenever an undertaking con­
tinues or, as in this case, takes on an activity
carried on until that time by another under­
taking. In its view, the fact that, in the present
case, a contract was awarded to a succession
of undertakings, whereas in Schmidt a branch
of a bank was subcontracting the cleaning of
its premises to an outside firm for the first
time, is not a decisive consideration.
49. In its order for reference, the national
court points out that the activity carried on
by the various succeeding companies in rela­
tion to protecting the medical supplies depot
at Efringen-Kirchen was exactly the same.
50. To be precise, the national court states
that the contract between the Bundeswehr,
which runs the medical supplies depot, and
the security outfit is a detailed contract drawn
up by the competent military administration
and put out to tender. Both the invitation to
tender and the contract itself specify in great
detail the nature and scope of the security
duties entailed; the required number of secu­
rity guards and accompanying dogs; require­
ments concerning security personnel 16 vis-
à-vis qualifications, equipment, training,
supervision and weapons instruction.
51. The national court adds that the contract
is performed in accordance with the require-
15 — Cited in footnote 14 above.
16 — Article 2 of the site security maintenance contract of 2
January 1990, which is mentioned in the order for reference.
I-8191
OPINION OF MR COSMAS—JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
ments specified by the Bundeswehr and on a
special legal basis, namely the German Law
concerning the Use of Direct Force and the
Exercise of Special Powers by Soldiers in the
Bundeswehr and Civil Surveillance Person­
nel 17 of 12 August 1965 (hereinafter the
'UZwGBw').
52. Lastly, the national court observes that
contractual relations between employer and
employee are to a large extent determined,
not only by the above-mentioned German
legislation and the contract for the provision
of services, but also, irrespective of the
employer's identity, by the basic collective
agreement and the collective wage agreements
for the security industry, which are recog­
nised as being of general application.
53. The national court is consequently
inclined to the view that it is in fact dealing
with part of the Bundeswehr's business,
namely 'site security maintenance'. It also
considers that, since the Bundeswehr prede­
termines the form of the contract and since
the site and equipment are the same and the
same security personnel have been deployed
for years, the 'economic entity' in question
retains its identity, even if on each occasion a
different employer actually runs it.
54. Considering that the outcome of the case
depended on the interpretation of the Direc­
tive, the Arbeitsgericht Lörrach referred the
following questions to the Court for a pre­
liminary ruling:
'1 . Do Article 1(1) and Article 4(1) of Council
Directive 77/187/EEC also apply to the
transfer of part of a business, such as the
task of guarding a military installation,
where there is no direct legal transfer
between successor contractors (surveil­
lance undertakings)?
2. Is that at any rate the case if, on termina­
tion of the contract, the part of the busi­
ness reverts to the body awarding the con­
tract, which then immediately enters into
a contract for services with a successor
which contains essentially the same stan­
dard conditions?
3. Is there at any rate a transfer of a business
within the meaning of Article 1(1) of Direc­
tive 77/187/EEC if essentially the same
employees continue to perform the same
surveillance duties on essentially the same
terms, which are determined to a large
extent by the body awarding the contract?'
17 — Gesetz über die Anwendung unmittelbaren Zwanges und
die Ausübung besonderer Befugnisse durch Soldaten der
Bundeswehr und zivile Wachpersonen, Bundesgesetzblatt
(Official Gazette), I, p. 796.
I - 8192
HERNÁNDEZ VIDAL AND OTHERS
V — The questions referred by the national
court
A — The need to answer the questions
55. I should point out, first, that most of the
questions raised in these cases — with the
exception of the question concerning the con­
cept of a transferable economic entity raised
in Case C-247/96 Horst Ziemann — could be
answered on the basis of the case-law of the
Court and in particular on the basis of its
judgment in Case C-13/95 Sitzen.18 In my
view, that judgment gives detailed indications
for the national courts as to the criteria to be
employed and the relative weight to be
attached to them. The national courts never­
theless insist on the need for a preliminary
ruling on the questions they have referred, in
view of the special features of the circum­
stances in each case and, in particular, of the
manner in which the transfers were carried
out.
56. I consider that in the light of the Court's
case-law, which answers most of the ques­
tions raised in the present cases, the national
courts should be given general answers pro­
viding them with interpretative criteria that
will enable them to classify the facts, a task
which it is not for the Court itself to per­
form. Any other course would divert the
Court from its true function, as defined in
Article 177 of the Treaty, and would diminish
the role of the national court in the adminis­
tration of ordinary law within the Commu­
nity legal order. In accordance with Article
177, 'it is clear therefore that the Court has
never attempted wholly to displace national
courts, and traditionally leaves certain matters
to be decided by the referring court'.19
B — The case-law of the Court
57. It should be observed at the outset that
— pursuant to Article 100 of the EC Treaty,
which is the legal basis for the Directive —
the sole criterion for determining whether an
activity falls within the scope of the Direc­
tive is whether it constitutes an economic
activity within the meaning of Article 2 of the
18 — This judgment has already been mentioned in footnote 2.
19 — This point was made by Advocate General Jacobs in point
45 of his Opinion in Case C-338/95 Wiener [1997] ECR
I-6495, in which he also raised the broader issue of the
appropriate division of tasks between the Court and national
courts and suggested that the Court should exercise self-
restraint and focus on important issues of Community law
(points 8 et seq.)» a suggestion which the Court did not
follow in that case. However, Mr Jacobs added (point 45):
'It seems to me that, if it is open to the Court to reformulate
questions and to give a reply which, in some cases, signifi­
cantly diverges from the terms of the question referred in
order to focus on the relevant Community law issues, it
must also be open to the Court to exercise self-restraint and
to limit itself to more general issues of interpretation.'
I - 8193
OPINION OF MR COSMAS — JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
Treaty. 20 There can be no doubt that cleaning,
the maintenance 21 and protection of various
premises, and provision of home-help services
for persons in need are examples of such eco­
nomic activities.
58. It should also be borne in mind that,
according to the established case-law of the
Court,22 the purpose of Directive 77/187 is
'to ensure that the rights of employees are
safeguarded in the event of a change of
employer by enabling them to remain in
employment with the new employer on the
terms and conditions agreed with the transf­
eror. The Directive is therefore applicable
wherever, in the context of contractual rela­
tions, there is a change in the legal or natural
person who is responsible for carrying on the
business and who incurs the obligations of an
employer towards employees of the under­
taking'.
59. The Court has also repeatedly ruled23
that 'the decisive criterion for establishing the
existence of a transfer within the meaning of
the Directive is whether the entity in ques­
tion retains its identity, as indicated inter alia
by the fact that its operation is actually con­
tinued or resumed'.
60. According to the case-law cited above,
there are two basic conditions for establishing
the existence of a transfer of an undertaking,
business or part of a business: (a) the under­
taking, business or part of a business must
constitute an economic entity at the outset,
and (b) that entity must continue to exist after
the change of ownership.
61. The Court has also ruled on a number of
occasions 24 that 'the Directive is applicable
wherever, in the context of contractual rela­
tions, there is a change in the natural or legal
person who is responsible for carrying on the
business and who incurs the obligations of an
employer towards employees of the under­
taking. Thus, there is no need, in order for
the Directive to be applicable, for there to be
any direct contractual relationship between
the transferor and the transferee: the transfer
may also take place in two stages, through the
intermediary of a third party, such as the
owner or the person putting up the capital'
(my emphasis).
20 — The concept of an 'economic activity' within the meaning of
Article 2 of the Treaty covers the pursuit of an activity as an
employed person or the provision of services for remunera­
tion; see, for example, Case 196/87 Steymann [1988] ECR
6159, paragraph 10, and Case 13/76 Dona [1976] ECR 507,
paragraph 12.
21 — Of an undertaking's photocopiers, lifts and electrical appli­
ances, for example.
22 — See Case 101/87 Bork [1988] ECR 3057, paragraph 13. See
also Joined Cases 144/87 and 145/87 Berg v Besselsen [1988]
ECR 2559, paragraph 12, and Case C-305/94 Rotsart de
Hertaing [1996] ECR I-5927, paragraph 16.
23 — See Süzen, cited in footnote 2, paragraph 10; Case 24/85
Spijkers [1986] ECR 1119, paragraphs 11 and 12; and, most
recently, Joined Cases C-171/94 and C-172/94 Merckx and
Neuhuys [1996] ECR I-1253, paragraph 16.
24 — See, for example, Süzen, paragraph 12, and Merckx and
leuhuys, paragraph 28.
I-8194
HERNÁNDEZ VIDAL AND OTHERS
62. It is therefore clear from the case-law of
the Court that the mode of the transfer is
immaterial and that the Directive applies wher­
ever, in the context of contractual relations,
there is a change in the natural or legal person
who incurs the obligations of an employer
towards employees of the undertaking. 25 In
other words, wherever there is an economic
entity to begin with and that entity retains its
identity after the transfer, the mode of the
transfer is of little significance. 26
63. The Directive does not, however, define
the terms 'undertaking', 'business' and 'part
of a business'. The Court, in its case-law, pro­
vides a set of criteria for determining when
there is an 'undertaking', 'business' or 'part of
a business' and when there is a 'legal transfer'
or when it is appropriate to speak of a 'trans­
fer'.
64. It should be noted that, in his Opinion in
Schmidt,27 Advocate General Van Gerven
pointed out that 'the Court recognises a
common denominator underlying the three
concepts of "undertaking", "business" and
"part of a business", namely [the concept] of
an "economic unit" ..., [a term] which, in my
opinion, refer[s] to a unit with a minimum
level of organisational independence, which
can exist by itself or constitute part of a larger
undertaking'.
65. However, the Court has held 28 that 'for
the Directive to be applicable, ... the transfer
must relate to a stable economic entity whose
activity is not limited to performing one spe­
cific works contract ... The term entity thus
refers to an organised grouping of persons
and assets facilitating the exercise of an eco­
nomic activity which pursues a specific objec­
tive'. 29
66. In my view, the Court must make it clear
that the term economic entity does not refer
only to an organised grouping involving both
persons and assets, since if it did, the protec­
tion offered by the Directive would be unavail­
able to entire sectors of activities in which the
workforce is the main factor and the tangible
or intangible assets are insignificant.
67. As regards the first criterion formulated
by the Court, namely the extent to which
there is a part of a business or a business, I
believe it is important to take account of the
specific nature of the economic activity in
each particular case, such as, for example, the
25 — See, for example, Merckx and Netthuys and Süzen, cited
above in footnotes 23 and 2 respectively.
26 — For example, in Case 287/86 Ny Mølle Kro [1987] ECR
5465, paragraph 14 and, particularly, paragraph 15, the Court
held tnat the Directive is applicable where the owner of a
leased undertaking resumes its operation following a breach
of the lease by the lessee.
27 — Point 13.
28 — See, for example, Case C-48/94 Rygąard [1995] ECR I-2745,
paragraphs 20 and 21, and Sitzen, cited in footnote 2 above,
paragraph 13.
29 — It is interesting to note that Article 1(1)(b) of Directive
98/50 provides that there is a transfer within the meaning of
that Directive 'where there is a transfer of an economic
entity which retains its identity, meaning an organised
grouping of resources which has the objective of pursuing
an economic activity, whether or not that activity is central
or ancillary'.
I-8195
OPINION OF MR COSMAS—JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
cleaning of certain premises. In principle, in
the absence of evidence to the contrary, this
is an activity, as the Commission rightly points
out, in which the human factor is the main
consideration and the material factors (tools,
etc.) are quite clearly less important.
68. There are thus certain activities where, in
the event of a transfer, the material compo­
nent of the activity transferred is insignifi­
cant. What is important in such cases and
what accounts for the turnover is the fact that
'unskilled labour' is employed. Cleaning ser­
vices, in particular, clearly fall into that cat­
egory.
69. Consequently, neither the fact that an
undertaking providing cleaning services has
no actual assets — whether tangible (build­
ings, tools and equipment, etc.) or intangible
(know-how, goodwill, etc.) — nor the fact
that, if awarded a contract, it is provided with
only minimal resources by the client under­
taking, 30 means that the service provided
cannot be an organised and independent eco­
nomic entity. Otherwise, whole categories of
undertakings with the above characteristics
would probably receive no protection under
the Directive and their employees — those
most in need of that protection — would be
effectively deprived of it, because no signifi­
cant tangible or intangible factors of produc­
tion are involved.
70. I therefore believe it ought to be clearly
stated that in certain labour-intensive sectors,
the idea of a group of employees engaged in
a joint activity on a permanent basis 31 is of
decisive importance. 32 Consequently, an orga­
nised group of employees engaged in a joint
activity and pursuing a specific objective over
a number of years in the same workplace may,
even where there are no other significant fac­
tors of production, tangible or intangible,
constitute an economic entity and accordingly
fall within the scope of the Directive.
71. Indeed, this follows indirectly from the
judgment in Süzen, 33 according to which: '...
Where in particular an economic entity is
able, in certain sectors, to function without
any significant tangible or intangible assets,
the maintenance of its identity following the
transaction affecting it cannot, logically,
depend on the transfer of such assets'.
30 — For example, use of the client's electricity, heating and
refrigerators on the premises where the cleaning or mainte­
nance, etc. is carried out.
31 — Sitzen, paragraph 21.
32 — In this connection, see Vivien Shrubsall, 'Competitive ten­
dering, Out-sourcing and the Acquired Rights Directive',
Modern Law Review, 1998, pp. 85 to 92, p. 88.
33 — Paragraph 18.
I-8196
HERNÁNDEZ VIDAL AND OTHERS
72. Moreover, the Court has consistently held
that it is for the national courts to determine
whether the Directive is indeed applicable,
taking into account the factual considerations
listed by the Court in paragraph 13 of its
judgment in Spijkers: 'In order to determine
whether those conditions are met, it is neces­
sary to consider all the facts characterising
the transaction in question, including the type
of undertaking or business, whether or not
the business's tangible assets, such as build­
ings and movable property, are transferred,
the value of its intangible assets at the time of
the transfer, whether or not the majority of
its employees are taken over by the new
employer, whether or not its customers are
transferred and the degree of similarity
between the activities carried on before and
after the transfer and the period, if any, for
which those activities were suspended. It
should be noted, however, that all those cir­
cumstances are merely single factors in the
overall assessment which must be made and
cannot therefore be considered in isolation.' 34
(my emphasis).
73. The case-law cited above shows clearly
that, in the case of contracts between under­
takings, the mere fact that the service pro­
vided by the old and the new awardees of a
contract is similar does not of itself justify the
conclusion that an economic entity has been
transferred. In this connection, the Court
ruled in Süzen 35 that: 'An entity cannot be
reduced to the activity entrusted to it. Its
identity also emerges from other factors, such
as its workforce, its management staff, the
way in which its work is organised, its oper­
ating methods or indeed, where appropriate,
the operational resources available to it'. 36
74. For example, when the whole cleaning
business is transferred, that means that all its
34 — Sec also Redmond Stichting, cited in footnote 14 above,
paragraph 24, in Case C-209/91 Watson Rask [1992] ECR
I-5755, paragraph 20, and Süzen, cited in footnote 2 above,
paragraph 14.
35 — Paragraph 15.
36 — In paragraph 17 of its judgment in Schmidt, the Court refers
to its judgments ín Spijkers, paragraph 11, and Redmond
Stichting, paragraph 23, according to which '... the retention
of that identity [that of an economic entity] is indicated inter
alia by the actual continuation or resumption by the new
employer of the same or similar activities' (my emphasis). It
concluded that, in the case at issue, where ail the relevant
information was contained in the order for reference, 'the
similarity in the cleaning work performed before and after
the transfer, which is reflected, moreover, in the offer to
re-engage the employee in question, is typical of an opera­
tion which comes within the scope of the Directive and
which gives the employee whose activity has been trans­
ferred the protection afforded to him by that Directive'.
However, in my view, the Court's use of the term 'inter alia'
means that the pursuit of an economic activity is not the
only criterion for determining whether a transfer of an
undertaking, business or part of a business has occurred and
that other facts must also be taken into account. In that par­
ticular case, the Court also took into account the offer to
re-engage the sole employee of the part of the business in
question. In its judgment in Sitzen, paragraph 21, it con­
firmed that this is a relevant factor, albeit in combination
with a number of others. The judgment in Schmidt was not
well received: sec, for example, Jean Déprez, Transfert
d'entreprise. La notion de transfert d'entreprise au sens de
la directive européenne du 14 février 1977 et de l'article
L 122-12, alinéa 2 du code du travail: jurisprudence française
et communautaire', ín RJS, 5/95, pp. 315-321. See also Dr.
Manfred Zuleeg, 'Ist der Standard des deutschen Arbeitsre­
chts durch europäische Rechtsprechung bedroht?
Bemerkungen zum Urteil Christel Schmidt des Europäis­
chen Gerichtshofs', in 'Das Arbeitsrecht der Gegenwart', pp.
41-54, and Dr. Bernd Waas, 'Betriebsübergang durch 'Funk-
tionsnachfolge'?', in EuZW 17/94, pp. 528/532.
It is interesting to note that, shortly after the judgment in
Schmidt and as a result of the critical response it provoked,
the Commission incorporated in its Proposal for a Direc­
tive (94/C 274/08) COM(94)300 final — 94/0203(CNS) (OJ
1994 C 274, p. 10) amending Directive 77/187 a provision
(Article 1(1), second subparagraph) which read: 'The transfer
of an activity which is accompanied by the transfer of an
economic entity which retains its identity shall be deemed
to be a transfer within the meaning of this Directive. The
transfer of only an activity of an undertaking, business or
part of a business, whether or not it was previously carried
out directly, docs not in itself constitute a transfer within the
meaning of the Directive'. That proposal was strongly criti­
cised, both by the Parliament (OJ 1997 C 33, p. 81), which
adopted Amendment 4 deleting that subparagraph, and before
that by the Committee of the Regions (OJ 1996 C 100,
p. 25, point 1.1) and the Economic and Social Committee
(OJ 1995 C 133, p. 13, points 1.2.3 and 1.3); it was not in
the end incorporated in Directive 98/50.
I-8197
OPINION OF MR COSMAS—JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
employees are transferred. In addition, its
main assets are the order book, the list of
customers, the way in which the work is
organised, etc. In this case, there is no doubt
as to the interpretation and application of the
provisions of the Directive. On the other
hand, the question does arise in the case of
the transfer — or, to be more specific, the
loss — to a competitor of a service contract
for cleaning one or more establishments,
entailing the loss of a single customer (for
example, a contract for cleaning a single office).
75. The Court held in Sitzen 37 that: 'The
mere loss of a service contract to a competitor
cannot... by itself indicate the existence of a
transfer within the meaning of the Directive.
In those circumstances, the service under­
taking previously entrusted with the contract
does not, on losing a customer, thereby cease
fully to exist, and a business or part of a busi­
ness belonging to it cannot be considered to
have been transferred to the new awardee of
the contract'.
76. The Court also noted, in its judgment in
Sitzen, 38 that 'although the transfer of assets
is one of the criteria to be taken into account
by the national court in deciding whether an
undertaking has in fact been transferred, the
absence of such assets does not necessarily
preclude the existence of such a transfer ...'.
77. The Court went on to say, in the same
judgment, 39 that 'the national court, in
assessing the facts characterising the transac­
tion in question, must take into account among
other things the type of undertaking or busi­
ness concerned. It follows that the degree of
importance to be attached to each criterion
for determining whether or not there has been
a transfer within the meaning of the Direc­
tive will necessarily vary according to the
activity carried on, or indeed the production
or operating methods employed in the rel­
evant undertaking, business or part of a busi­
ness. Where in particular an economic entity
is able, in certain sectors, to function without
any significant tangible or intangible assets,
the maintenance of its identity following the
transaction affecting it cannot, logically,
depend on the transfer of such assets'.
78. At this point, I feel I must draw atten­
tion to the theoretical and practical confusion
that arises when the new awardee's readiness
to take over the majority of the staff assigned
by his predecessor to performance of the
contract is employed as a criterion to deter­
mine whether the entity constituted by the
previous awardee can be regarded as the sub­
ject of a transfer within the meaning of the
Directive.
37 — Paragraph 16.
38 — Paragraph 17. See also Schmidt and Merckx and Neubnys,
cited in footnotes 14 and 23 above, paragraphs 16 and 21
respectively. 39 — Paragraph 18.
I - 8198
HERNÁNDEZ VIDAL AND OTHERS
79. It is true that the Court pointed out in
this connection, in its judgment in Sitzen, 40
that 'the factual circumstances to be taken
into account in determining whether the con­
ditions for a transfer are met include in par­
ticular, in addition to the degree of similarity
of the activity carried on before and after the
transfer and the type of undertaking or busi­
ness concerned, the question whether or not
the majority of the employees were taken over
by the new employer'. It added: 41 'Since in
certain labour-intensive sectors a group of
workers engaged in a joint activity on a per­
manent basis may constitute an economic
entity, it must be recognised that such an
entity is capable of maintaining its identity
after it has been transferred where the new
employer does not merely pursue the activity
in question but also takes over a major part,
in terms of their numbers and skills, of the
employees specially assigned by his prede­
cessor to that task. In those circumstances, as
stated in paragraph 21 of Rygaard, cited above,
the new employer takes over a body of assets
enabling him to carry on the activities or cer­
tain activities of the transferor undertaking
on a regular basis'.
80. In my view, however, the use of this cri­
terion would cause confusion because, if —
in order to determine whether or not there
has been a transfer — particular importance
is to be attached to whether or not the trans­
feree or contractor intended to take over the
staff of the transferor or body awarding the
contract, it would mean that the protection
afforded by the Directive depends essentially
on the intentions of the parties. It could be
argued that this cannot be a decisive criterion
in determining the protection to be afforded
by the Directive because, as some Member
States have rightly pointed out in their written
observations, it begs the question: the result
achieved by applying the Directive becomes
a condition determining whether it is to
apply. 42 This absurd conclusion, or vicious
circle, is clearly contrary to the intention of
the Community legislature, which was to
protect employees in the event of a change in
the ownership of the undertaking, business or
part of a business as a result of a legal transfer
or merger. The negative repercussions for
employees of admitting readiness to take over
staff as a decisive criterion for the application
of the Directive cannot be neglected. 43
81. In other words, there is to my mind a
certain contradiction between the idea of using
re-engagement of the major part of the staff
by the new employer as a criterion for deter­
mining the application of the protective pro­
visions of the Directive, on the one hand, and
the purpose of those provisions, namely to
protect employees in the event of a transfer,
on the other.
40 — Paragraph 20. See also Spijkerit cited in footnote 23 above,
paragraph 13.
41 — Paragraph 21.
42 — On this theme, sec, for example, Patricia Pochet, 'CICE:
l'apport de l'arrêt Schmidt à la définition du transfert d'une
entité économique', in 'Droit social', November 1994, pp.
931-935, in particular p. 934, where she rightly speaks of
petitio principii. Sec also Vivien Shrubsall's analysis of the
problem, op. cit., p. 87.
43 — In any case, the question still remains of who is to pay dam­
ages in the event of dismissal.
I-8199
OPINION OF MR COSMAS — JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
82. In Rotsart de Hertaing, 44 which—admit­
tedly—concerned the interpretation of Article
3(1) of the Directive, the Court was able to
avoid the issue, ruling in the light of earlier
case-law 45 that 'in the event of the transfer of
an undertaking, the contract of employment
or employment relationship between the staff
concerned and the undertaking transferred
may not be maintained with the transferor
and is automatically continued with the trans­
feree'. 46 It concluded that 'contracts of
employment or employment relationships
existing on the date of the transfer of an
undertaking between the transferor and the
workers employed in the undertaking trans­
ferred are automatically transferred to the
transferee by the mere fact of the transfer'. 47
In the same judgment, the Court added 48 that
'... by reason of the mandatory nature of the
protection afforded by the Directive, and in
order not to deprive workers of that protec­
tion in practice, the transfer of the contracts
of employment may not be made subject to
the intention of the transferor or the trans­
feree, and more particularly ... the transferee
may not obstruct the transfer by refusing to
fulfil his obligations'.
83. It is a feature of all these cases that they
concern undertakings, businesses or parts of
businesses in which the human factor, the
workforce, is the main consideration and the
tangible or intangible assets are of little or no
importance.
84. For these reasons, I consider that in the
case of undertakings, businesses or parts of
businesses in which the human factor, the
workforce, is the main consideration, the pres­
ence of a group of workers engaged in a joint
activity on a permanent basis — a group that
is taken over by the transferee or contractor
— is of decisive importance. In other words,
the question whether there has been a transfer
of an undertaking, business or part of a busi­
ness should be considered in the light of that
factor; and that should be the criterion for
determining the application of the Directive,
rather than the — to my mind — unimpor­
tant issue of whether or not a certain number,
or even the majority, of the staff have been
re-engaged by the new employer.
85. By using that criterion, it will be possible
to avoid situations where, for example, a
transferee is free to take over workers with
special skills or know-how and dismiss
unskilled or low-skilled workers, that is to
say, those most in need of the protection
afforded by the Directive. 49
44 — Paragraph 18. That case concerned the applicability of the
Directive in the event of the termination of the employment
contract of an employee of a company in liquidation, whose
activities were taken over by another newly formed com­
pany operating from the same premises.
45 — See Case C-362/89 D'Urso [1991] ECR 1-4105, paragraph
12.
46 — See also Vivien Shrubsall's analysis of the problem, op. cit,
p. 87.
47 — Sec D'Urso and Rotsart de Hertaing, cited in footnotes 45
and 22 above, paragraphs 20 and 18 respectively.
48 — Paragraph 20. 49 — On this point, see Vivien Shrubsall, op. cit., p. 92.
I - 8200
HERNÁNDEZ VIDAL AND OTHERS
86. I do not dispute that the factor of inten­
tion, in the sense of the wishes or actions of
the parties (the transferor or the body
awarding the contract and the transferee or
the new contractor), also constitutes a crite­
rion for determining whether or not a transfer
has occurred. That factor cannot be disre­
garded. The readiness to take over all or most
of the employees, in terms of their numbers
and skills, is undoubtedly an important factor
and one that should prompt the court adju­
dicating on the merits to consider carefully
whether there are any other factors indicative
of a transfer of an economic entity. In other
words, I have been pursuing this line because
of the particular nature of the undertaking or
business at issue in the present case. I repeat
that the Court has taken this factor into
account, notably in its judgment in Spijkers.
87. This approach also has the advantage of
reconciling the principle of economic freedom,
the freedom to enter into contracts with all
the attendant risks that freedom entails, on
the one hand, with the principle of subroga­
tion in the event of transfers and protection
of employees, on the other.
C — Joined Cases C-127/96, C-229/96 and
C-74/97
88. It must be borne in mind that the Court
has never had occasion to consider a case in
which one undertaking, having entrusted the
cleaning of its premises to another, decides to
terminate the contract and take over the
cleaning work again itself (resumption
in-house). 50
(1) Case C-127/96, Hernandez Vidal
(a) Question 1
89. As regards the point raised in the first
question — to what extent application of the
Directive is affected by whether the activity
at issue is the main business of the under­
taking or a secondary activity — 5I the
case-law is quite clear.
90. In Redmond Stichting, the Court held
that the transfer by one undertaking to another
50 — In fact, the circumstances in Schmidt were the precise reverse:
in that case, one undertaking contracted out to another
cleaning work that it had previously done itself, even though
the activity in question had been performed, prior to the
transfer, by a single employee. In Siizen, an undertaking had
terminated the contract for cleaning its premises and con­
cluded a new contract for the same work with a different
undertaking.
51 — 1 should point out that Article 1(1)(b) of Directive 98/50
provides that there is a transfer within the meaning of the
Directive where there is 'a transfer of an economic entity
which retains its identity, meaning an organised grouping of
resources which has the objective of pursuing an economic
activity whether or not that activity is central or ancillary'
(my emphasis).
I - 8201
OPINION OF MR COSMAS —JOINED CASES C-127/96, C-229/96AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
of only part of its activities 52 (namely, the
provision of assistance to drug addicts but
not the organisation of social and recreational
activities) did not necessarily preclude the
application of the Directive. The Court
observed 53 that the mere fact that the organi­
sation of social and recreational activities is
'said to have constituted an independent func­
tion is not sufficient to rule out the applica­
tion of the aforementioned provisions of the
Directive, which were laid down not only for
transfers of undertakings, but also for trans­
fers of businesses or parts of businesses, with
which activities of a spedai nature may be
equated'. 54
91. In Watson Rask, 55 the Court made the
following observation: 56 'Thus, where one
businessman entrusts, by means of an agree­
ment, responsibility for running a facility of
his undertaking, such as a canteen, to another
businessman who thereby assumes the obli­
gations of employer vis-à-vis the employees
assigned to that facility, the resulting transac­
tion may fall within the scope of the Direc­
tive, as defined in Article 1(1). The fact that
in such a case the activity transferred is merely
an ancillary activity for the transferor without
a necessary connection with its company objects
cannot have the effect of excluding that trans­
action from the scope of the Directive'. 57
92. Consequently, bearing in mind the points
made in section (B) above, I take the view
that the work of cleaning the premises of
undertakings — an activity for which they
have a permanent need even where their main
business is not cleaning — may fall within the
scope of the Directive if it is carried out by a
stable group of employees pursuing a specific
objective; this holds true even where there
has been no transfer of significant tangible or
intangible assets, provided that there is an
economic entity and that that entity retains
its identity after the transfer.
(b) Question 2
93. The second question referred by the
national court has two branches. It first seeks
to ascertain whether the term 'legal transfer'
may cover the termination of a mercantile
contract for the provision of cleaning services;
secondly, it asks whether, if that is the case, it
may depend on whether the undertaking
52 — The undertaking at issue in that case was a Dutch founda­
tion engaged in assisting drug addicts.
53 — Paragraph 30.
54 — My emphasis.
55 — The undertaking at issue in this case, to which I have already
referred in footnote 34, was Philips, which had entrusted the
management of its four staff canteens to a catering company,
ISS. Under that arrangement, ISS agreed to take over Philips'
canteen staff (about ten people) on the same terms and con­
ditions, while Philips agreed to pay a fixed monthly fee and
offer certain remuneration in kind. Thus, Philips provided
ISS with premises and equipment, electricity, heating and
telephones, wardrobe facilities and refuse removal, and sup­
plied it with various products at wholesale prices. The Court
held that the Directive was applicable.
56 — Paragraph 17. 57 — My emphasis.
I - 8202
HERNÁNDEZ VIDAL AND OTHERS
hiring the services carries out the cleaning
using its own workers or using workers under
a new contractual arrangement.
94. As I explained earlier, provided that there
is an economic entity and that entity retains
its identity after the transfer, the mode of
transfer is immaterial. The fact that the transfer
takes the form of a contract under which cer­
tain activities are entrusted by one under­
taking to another and that those activities are
subsequently resumed by the first under­
taking after the termination of the contract is
not, in my view, decisive for the application
of the Directive, provided the other condi­
tions described above are met.
95. It is true that, when the whole cleaning
business is transferred, the transfer includes
an organised group of employees and the
main assets, comprising the order book, the
list of customers, the way in which the work
is organised, etc. In such cases, there is clearly
no particular problem concerning the applica­
tion of the protective provisions of the Direc­
tive.
96. The problem does arise, however, when
the transfer does not include the whole
cleaning business but only part of it, relating
to a single customer.
97. In Watson Rask, the Court held 5S that:
'First, the decisive criterion for establishing
whether there is a transfer for the purposes of
the Directive is whether the entity in ques­
tion retains its identity, as indicated inter alia
by the fact that its operation is actually con­
tinued or resumed'. 59 It added 60 that it is
necessary to consider all the facts charac­
terising the transaction in question, including
whether or not the majority of employees are
taken over by the new employer.
98. In the present case, it is apparent from
the contract concluded between Hernandez
Vidal and Contratas y Limpiezas that,
although the employees worked in the pre­
mises of the former undertaking, their employ­
ment relationship was with the latter. More­
over, no offer was made to re-engage Prudencia
and Maria Gómez Pérez after the contract
between Hernández Vidal and Contratas y
Limpiezas expired.
58 — Judgment cited in footnote 34 above, paragraph 19.
59 — Sec also Schmidt, Spijkers and Redmond Stichting, cited in
footnotes 14, 23 and 14 above, paragraphs 17, 11 and 23
respectively.
60 — Paragraph 20.
I - 8203
OPINION OF MR COSMAS—JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
99. I consider that the similarity in the
cleaning work done before and after the ter­
mination of the contract cannot be regarded
as a decisive factor for determining whether
or not there is a transfer. Nor is an offer on
the part of the new contractor to re-engage
the employee sufficient in itself to resolve that
question.
100. In my view, it is for the national court
to assess in such cases, on the basis of the cri­
teria defined by the Court — in particular by
determining whether there is a group of
workers engaged in a joint activity on a per­
manent basis and whether it is taken over by
the transferee or contractor — whether the
entity at issue is a business or part of a busi­
ness, and whether that business or part of a
business has been the subject of a transfer
which brings the employees concerned within
the scope of the Directive.
101. As regards the second branch of Ques­
tion 2, it is, I think, sufficient to point out
that the Court has consistently ruled that the
Directive is applicable wherever there is a
change in the person responsible for carrying
on the business and there is no need for there
to be any direct contractual relationship
between the transferor and the transferee. 61
102. Thus, in order to ascertain whether the
conditions for the transfer of an economic
entity are met, it is necessary to consider all
the facts characterising the transaction in ques­
tion. Accordingly, it is necessary to determine
the type of undertaking or business; whether
or not the business's tangible assets, such as
buildings and movable property, are trans­
ferred; the value of its intangible assets at the
time of the transfer; whether or not the
majority of its employees are taken over by
the new employer; whether or not its cus­
tomers are transferred and the degree of simi­
larity between the activities carried on before
and after the transfer, and the period, if any,
for which those activities were suspended.
However, all those circumstances are merely
single factors in the overall assessment which
must be made and cannot therefore be con­
sidered in isolation. 62
103. In view of the specific nature of cleaning
activities, the answer to the question whether
or not there has been a transfer depends not
so much on the transfer of certain material
assets (electrical and other equipment used
for the work), as on whether or not a majority
of the employees are taken over by the new
employer, whether or not the customers are
transferred and the degree of similarity
between the activities carried on before and
after the transfer. In any event, it is for the
national court to establish in each case, in the
light of the criteria for interpretation set out
above, whether or not there has been a transfer.
61 — See,for example, Merckx and Neubuys, Daddy's Dance Hall,
Bork and Redmond Stichting, cited in footnotes 23, 14, 22
and 14 above, paragraphs 30, 10, 14 and 13 respectively.
62 — See, in particular, Spijkers and Redmond Stichting, cited in
footnotes 23 and 14 above, paragraphs 13 and 24 respec­
tively.
I - 8204
HERNANDEZ VIDAL AND OTHERS
104. Finally, I should point out that the Direc­
tive seeks to provide a minimum level of pro­
tection for employees to ensure that their
rights are safeguarded in the event of trans­
fers of undertakings, businesses or parts of
businesses. There is, moreover, a consistent
body of case-law 63 to the effect that 'the rules
of the Directive, in particular those con­
cerning the protection of workers against dis­
missal by reason of the transfer, must be con­
sidered to be mandatory, so that it is not
possible to derogate from them in a manner
unfavourable to employees'. This does not
affect the right of Member States, under Article
7 of the Directive, to apply or introduce pro­
visions which are more favourable to
employees.
(2) Case C-229/96, Friedrich Santner
(a) Question 1
105. The first question referred by the national
court seeks to ascertain whether, in a case
where, following termination of the legal
transfer to an outside firm of the cleaning
operations of individual parts of a business,
those operations are again carried out by the
undertaking itself, they can be treated as part
of a business within the meaning of the Direc­
tive.
106. I should point out, first, that, as the
Court has stated, 64 the number of persons
employed by a business is not a decisive factor
in determining whether or not there is a stable
economic entity whose activity is not limited
to performing one specific works contract. 65
107. However, to determine whether there is
a stable economic entity, the national court
must consider first whether it is dealing with
an organised grouping of persons and assets
or simply of persons, that is to say, a grouping
of employees who constitute a stable unit by
virtue of the fact that they are engaged in a
particular economic activitiy and pursue the
same objective, in the sense defined above. It
must then determine whether that grouping
has retained its identity.
108. I should also point out that, in the
present case, the existence of part of a busi­
ness within the meaning of the Directive is
not precluded by the fact that Hoechst has
carried out part of the cleaning operations
itself, using its own workers, following ter­
mination of the legal transfer of the opera-
63 — Sec, for example, Daddy's Dance Hnil, cited in footnote 14
above, paragraph 14, and Case C-319/94 Jules Dethier
Equipement [1998] ECR I-1061, paragraph 40.
64 — Sec, for example, Rygaard and Sitzen, cited in footnotes 28
and 2 above, paragraphs 20 and 13 respectively.
65 — I note that, in Schmidt, cited in footnote 14 above, the fact
that the cleaning activity was performed by a single employee
did not prevent the Court from deciding (paragraph 15) that
there was a stable economic entity. It added that the protec­
tion afforded by the Directive cannot depend on the number
of employees assigned to the part of the business transferred.
I - 8205
OPINION OFMR COSMAS—JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
tions in question to an outside firm. The part
of the operations concerned is the cleaning of
certain bathhouses, a service which each of
Mr Santner's employers had in turn con­
tracted to provide. In such cases, the protec­
tion afforded by the Directive is extended to
the employees assigned to that part of the
business, since, as the Court has ruled, 66 'an
employment relationship is essentially char­
acterised by the link existing between the
employee and the part of the undertaking or
business to which he is assigned to carry out
his duties'.
109. For the rest, I consider that this ques­
tion should receive the same answer as the
first question in Case C-127/96 Hernández
Vidal.
(b) Question 2
110. The second question seeks to ascertain
whether the position is the same where, fol­
lowing their transfer back to the undertaking,
those cleaning operations of certain parts of
the business premises are re-merged with the
cleaning operations of the premises as a whole.
111. According to the German Government,
the Directive is not applicable, there being no
economic entity that retained its identity after
the transfer, since the cleaning operations were
shared between Hoechst, which used its own
employees for the purpose, and outside firms.
The Commission also takes that view.
112. It is apparent from the documents in the
case that Hoechst never offered to re-engage
Mr Santner 67 and that it did in fact take over
all the cleaning operations in connection with
its bathhouses but entrusted them partly to
its own employees 68 and partly to outside
firms. It also appears that no other material
or organisational assets were returned to
Hoechst after the termination of the contract.
113. I should emphasise, in this connection,
that it is for the national court to establish
whether the business retained its identity after
the transfer, in the light of the various criteria
defined by the Court and taking account of
the specific nature of the business and of
activity of cleaning business premises, as set
out above.
114. I would point out, however, that Article
4(1) of the Directive states that the transfer of
66 — See Case 186/83 Botzen [1985] ECR 519, paragraph 15, and
Schmidt, cited in note 14 above, paragraph 13.
67 — Unlike the situation in Schmidt.
68 — According to the documents before the Court, the employees
in question were disabled people specially trained for the
purpose.
I - 8206
HERNÁNDEZ VIDAL AND OTHERS
an undertaking, business or part of a business
shall not in itself constitute grounds for dis­
missal by the transferor or the transferee but
that this provision shall not stand in the way
of dismissals that may take place for eco­
nomic, technical or organisational reasons
entailing changes in the workforce. Moreover,
the Court has held 69 that both the transferor
and the transferee have the power to effect
such dismissals.
(3) Case C-74/97, Gómez Montaña
115. The national court asks whether the
Directive covers circumstances in which the
termination of a contract with a cleaning
company results in the dismissal of the worker
employed by the contractor and the cleaning
is taken over by the principal, a railway trans­
port undertaking, using its own employees.
116. I should emphasise, first, that, in accor­
dance with the arguments developed above,
the fact that Renfe took over the cleaning of
Pontevedra railway station itself instead of
entrusting it to another outside firm is not
decisive in determining the answer to be given
to the national court.
117. Moreover, in the light of the facts given
by the national court and the written obser­
vations submitted in the course of the proce­
dure, I consider that Renfe's decision to take
over the cleaning and maintenance of the sta­
tion itself is clearly a case of continuing the
same economic activity. However, the national
court will have to determine, in the light of
the criteria set out above which are derived
from the case-law of the Court, whether Claro
Sol transferred a stable economic entity to
Renfe. It is apparent from the order for refer­
ence that all that Claro Sol transferred to
Renfe was responsibility for the cleaning and
maintenance of the station, so it simply lost a
contract for services to the contracting body,
a loss that cannot in itself establish the exist­
ence of a transfer within the meaning of the
Directive.
118. In other words, although Claro Sol lost
a customer, it has not thereby ceased fully to
exist, and a business or part of a business
belonging to it cannot be considered to have
been transferred to the new awardee of the
contract. 70
69 — Sec Jules Dethier Equipement, cited in footnote 63 above,
paragraph 37. 70 — See also Süzen, cited in footnote 2 above, paragraph 16.
I - 8207
OPINION OF MR COSMAS—JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
119. The national court will, however, have
to determine whether, in order to provide the
services in question, that is to say in order to
carry out the work, Claro Sol needed a cer­
tain number of employees (workers or mana­
gerial staff) and certain assets, minimal though
they might be (tools, equipment).
120. Similarly, the national court will have to
consider whether there was a transfer of an
organised grouping of employees, or at least
a major part of such a grouping, in terms of
their numbers and skills, or whether there
was a transfer of operating methods or the
way in which the work is organised, before
deciding in the light of all these indications
whether or not there was a transfer.
121. It is thus for the national court to decide,
on the basis of the abovementioned criteria,
whether or not there was an economic entity
after the transfer, bearing in mind the fact
that Renfe itself took over the cleaning of the
Pontevedra railway station, using its own
employees, and that it did not engage
Mrs Gómez Montaña after the termination of
its contract with Claro Sol, which had
employed her for the whole of the period
covered by the contract. If those criteria are
not satisfied, the answer to the question must
be in the negative.
122. Moreover, as I have already pointed out,
the fact that the cleaning work is ancillary to
Renfe's main business, which is rail transport,
does not — according to the case-law of the
Court — preclude the possibility that there
may be a transfer of a business or part of a
business within the meaning of the Directive.
Nor should particular importance be attached
to the number of employees assigned to the
part of the business in question, if other fac­
tors suggest that there has been a transfer.
123. Lastly, it should be borne in mind that
Article 7 of the Directive states that Member
States may apply or introduce laws, regula­
tions or administrative provisions which are
more favourable to employees.
D —Joined Cases C-173/96 and C-247/96
(1) Case C-173/96, Sánchez Hidalgo
124. In order to answer the question referred
by the national court, it is necessary on the
one hand to take account of the various cri­
teria laid down by the Court for establishing
whether there has been a transfer of a busi­
ness or part of a business and, on the other,
to determine whether the economic entity
transferred has retained its identity after the
transfer.
I - 8208
HERNÁNDEZ VIDAL AND OTHERS
125. It is apparent from the documents that
the activity at issue in this case is one in which
the human factor is paramount and the mate­
rial assets (buildings, equipment, organisation
of the work, know-how, etc.) are of lesser
importance.
126. Thus, in so far as this is a labour-
intensive sector, the criterion of a group of
workers, in the sense of a group of employees
engaged in a joint activity on a permanent
basis, 71 is of decisive importance. It is for the
national court to determine whether there is
such an organised grouping. The fact that
such employees, as a group, arc engaged by
the new owner may indicate that there is a
transfer within the meaning of the Directive,
even if no significant tangible or intangible
assets have been transferred.
127. The national court must also establish,
for example, the degree of similarity between
the activities carried on before and after the
transfer 72 and the structure of the undertak­
ings in question, that is to say, how they are
staffed, how they operate, etc. 73
128. In other words, it is for the national
court to establish whether there is a transfer
of part of a business, by determining whether
the home-help service has been continued
with the same team of home helps, possibly
assisted by other employees, whether the same
timetable has been kept, whether the service
is provided for the same people, etc.
129. The fact that the Municipality of Guad­
alajara, after putting the contract out to tender
again, awarded it to a different undertaking is
not, in my view, a decisive factor that should
affect the answer to be given by the Court
and thus preclude the application of the Direc­
tive; it is undoubtedly sufficient that too much
time should not have elapsed between the two
transfers.
130. In other words, there must be a close
temporal connection between the expiry of a
contract and its award to another operator.
The length of the interval must be considered
by the national court in the light of the facts
and the nature of the business in question but
it is enough in any event if the useful effect
71 — Sec Siizen, cited in footnote 2 above, paragraph 21.
72 — To be more precise, it must consider the particular charac­
teristics of the activity exercised first by Minerva and then
by Aser, under the contract concluded by those companies
with the Municipality of Guadalajara, that is to say, it must
decide whether or not these home-help services were the
same.
73 — The Commission notes (at point 8 of its written observa­
tions) that, in a report submitted to the municipality, Aser
explains that its structure is based on a number of teams of
home helps, with a coordinator and a technical team trained
by specialists (social workers, psychologists, etc.).
I - 8209
OPINION OF MR COSMAS —JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
of the protective provisions of the Directive
is preserved, 74
131. Similarly, too much importance — to
the point of affecting the Court's answer —
ought not to be attached to the fact that there
is no provision, either in the collective agree­
ment or in the tendering conditions, to the
effect that the new undertaking to which the
service was entrusted after the contract had
been put out to tender must be subrogated to
the previous contractor vis-à-vis its employ­
ment relationship with the workers. Indeed,
'by reason of the mandatory nature of the
protection afforded by the Directive, and in
order not to deprive workers of that protec­
tion in practice,' 75 the application of the
Directive cannot be made to depend on
whether or not a collective agreement or ten­
dering conditions contain a provision to that
effect, since its application depends on a
number of circumstances, in fact and in law, 76
which will determine whether or not there
has been a transfer.
(2) Case C-247/96, Horst Ziemann
132. The peculiarity of this case lies mainly
in the fact that the conditions to be applied
and their application are largely determined
by the body awarding the contract (the
Bundeswehr), on the one hand — in the invi­
tation to tender — as regards organisation of
the task of protecting the medical supplies
depot at Efringen-Kirchen by the particular
body to which the contract is awarded, and,
on the other hand, as regards the performance
of that task.
133. The national court essentially raises two
problems in the questions it refers to the
Court. First, it calls for a definition of the
concept of an economic entity in the context
of the transfer of a business following a change
in the provider of the service; this point is
raised essentially in the first part of the first
question and in the third question. It then
raises the problem of the importance to be
attached to the fact that the change in the
provider of the service came about as a result
of a call for tenders and the fact that there
was no direct contractual relationship between
the undertakings successively responsible for
security (protection and monitoring) at one
of the Bundeswehr's medical supplies depots;
this problem is raised in the second part of
the first question and in the second question.
(a) The concept of a transferable economic
entity
134. The first problem raised by the national
court is whether the Directive also applies to
the transfer of a business or part of a busi­
ness, such as the task of guarding a
Bundeswehr medical supplies depot (first part
of Question 1), if the same employees con­
tinue to perform the same duties on essen-
74 — This point is considered in greater detail below in the con­
text of Case 247/96 Horst Ziemann.
75 — See Rotsart de Hertaing, cited in footnote 22 above, para­
graph 20.
76 — The Commission refers in its written observations (at point
I.4) to a report submitted by Aser to the Municipality of
Guadalajara, from which it appears that Aser intended to
keep on the whole team of home helps responsible for pro­
viding the service when the transfer took place.
I - 8210
HERNÁNDEZ VIDAL AND OTHERS
tially the same terms, these being specified by
the body awarding the contract (Question 3).
135. In other words, given that the body
awarding the contract (the Bundeswehr)
defines in detail the rules for the organisation
and exercise of certain activities which con­
tinue to be performed by essentially the same
employees, the question before the Court is
whether this indicates the existence of an eco­
nomic entity, the transfer of which would fall
within the scope of the Directive. If not, that
is to say, if there is no economic entity, the
question of whether the protective provisions
of the Directive apply does not arise.
136. For the Directive to be applicable in a
case where two undertakings are responsible
in turn for the exercise of an activity, the first
undertaking must have established a suffi­
ciently organised (economic) entity for the
purpose.
137. It must therefore be determined whether
the influence exerted by the body awarding
the contract on the organisation and exercise
of that activity by the awardee may, in some
cases, effectively deprive the latter of its
freedom of action and consequently of the
power to establish an organised economic
entity to exercise the activity in question.
138. Ziemann Sicherheit doubts whether the
Directive is applicable to institutions such as
the Bundeswehr, which are governed by public
law.
139. Both Ziemann Sicherheit and the German
Government consider that protection of the
medical supplies depot did not constitute an
economic entity, since Ziemann Sicherheit was
unable to operate independently because of
the Bundeswehr's influence over the organi­
sation and performance of the tasks in ques­
tion. In their opinion, what was transferred
was a contract, not a business or part of a
business.
140. According to the Commission, there is
an economic entity but it was not transferred;
rather, it belonged, and still belongs, to the
Bundeswehr, which permits it only a
mininimal measure of organisational structure
and independence.
141. As I have already mentioned, the Court
has held 77 that 'for the Directive to be appli­
cable, ... the transfer must relate to a stable
economic entity whose activity is not limited
to performing one specific works contract'. It
has also stated that: 'The term entity thus
refers to an organised grouping of persons
77 — See, for example, Rygaard and Süzen, cited in footnotes 28
and 2 above, paragraphs 20 and 13 respectively.
I-8211
OPINION OF MR COSMAS—JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
and assets facilitating the exercise of an eco­
nomic activity which pursues a specific objec­
tive'.
142. It is therefore not sufficient for employers
to succeed one another in the exercise of a
particular activity, there must also be a transfer
of an economic entity, that is to say, of an
organised grouping of persons and/or assets
facilitating the exercise of an economic activity
which pursues a specific objective. Also, as I
explained earlier, in the case of activities where
the workforce is the main factor, the existence
of tangible or intangible assets cannot be
decisive.
143. Consequently, as the Commission rightly
observes (at point 22 of its written observa­
tions), the question of a transfer of a business
or part of a business from the first contractor
to the second (that is, from Ziemann Sicher­
heit to Horst Bohn) arises only if the 'site
security maintenance' of the medical supplies
depot at Efringen-Kirchen is an economic
entity and therefore part of a business within
the meaning of Article 1(1) of the Directive
and if that part of a business belonged to
Ziemann Sicherheit before it was transferred
to Horst Bohn. If, on the other hand, the 'site
security maintenance' part of the business
always belonged to the Bundeswehr despite
the fact that its management was entrusted to
a succession of outside firms, the question of
whether there has been a transfer of part of a
business does not arise.
(i) The concept of an 'economic entity'
144. As I have already pointed out, where
the guarding of certain premises is entrusted
to an undertaking, it constitutes a service and,
as such, an economic activity. When that
activity, which pursues a specific objective,
albeit one that is ancillary to the main object
of the undertaking, is exercised by an organ­
ised entity, that is to say by an organised
grouping of persons and/or assets, that entity
may be regarded as an economic entity, which
forms the basis of any undertaking, business
or part of a business in accordance with the
terminology used in the Directive.
145. It is true that an economic entity must
be organised, that is to say, it must have an
organisational structure, however minimal, in
order to constitute an undertaking, business
or part of a business.
146. In practice, that could refer mainly to
the way in which staff are organised, the
length and continuity of the period during
which the activity is exercised, the existence
of a work schedule with set hours of work,
the selection of staff and their assignment to
specific tasks. These factors, mentioned purely
by way of example, must be checked in each
case by the national court.
I - 8212
HERNÁNDEZ VIDAL AND OTHERS
147. In the light of the facts given in the order
for reference, I agree with the Commission
that 'site security maintenance' vis-à-vis the
medical supplies stored at the depot in ques­
tion may constitute an economic entity. My
reason for taking this view is that site security
was entrusted for a very long time to a par­
ticular group of security guards, even if their
obligations were governed by the UZwGBw
and by the terms and conditions of the ser­
vices contract. Moreover, it is apparent from
the documents in the case that security per­
sonnel are selected, trained and employed on
the basis of their ability to provide the required
service. They keep to established security
procedures, work for set hours and follow
specific instructions.
(ii) Whether the 'maintenance of site security'
remained in the hands of the Bundeswehr or
was transferred to the successive contractors.
148. The Commission considers that, in this
case, in view of the facts as described by the
national court, there was no transfer of part
of a business by the Bundeswehr to the first
undertaking and, after termination of the con­
tract, to the second. Effectively, in terms of its
organisational structure and autonomy, the
economic entity constituted by the 'mainte­
nance of site security' at the medical supplies
depot at Efringen-Kirchen inheres perma­
nently in the Bundeswehr, as the body
awarding the contract. There was conse­
quently no transfer of a business or part of a
business to Ziemann Sicherheit or Horst Bohn.
149. That view cannot, in my opinion, be
sustained. I have accepted that there is an
economic entity consisting of the protection
of the medical supplies depot at Efringen-
Kirchen, which belongs to the Bundeswehr.
Whatever the influence exerted by the
Bundeswehr on the organisation of that eco­
nomic entity, in particular through the rules
contained in the contract for services, I do
not think that influence is sufficient to exclude
the protection afforded by the Directive in
the event of transfers of undertakings, busi­
nesses or parts of businesses.
150. In other words, I take the view that the
part played by the body awarding the con­
tract (the Bundeswehr), 78 however impor-
78 — I should point out that the contract between the Bundeswehr,
which runs the medical supplies depot, and each of the secu­
rity outfits is a highly detailed contract drawn up by the
competent military administration and that it is put out to
tender. Both the call for tenders and the contract list in detail
the nature and scope of the security guards' duties; the
number of security guards and accompanying dogs; the
requirements to be satisfied by the security guards deployed;
requirements vis-à-vis the qualifications required of security
guards, their equipment, training, supervision and weapons
instruction. The authority awarding the contract (the
Bundeswehr) places at the disposal of security personnel, on
the premises of the medical supplies depot, a duty room;
lavatories and washing facilities; rest area and changing
rooms. The contractor may deploy only security guards
approved by the awarding authority in writing; it must give
it prior notice of replacement staff; and it must relieve per­
sonnel of their duties and replace them, if the awarding
authority so requires, at any urne. The national court adds
that the site security contract is performed in accordance
with the conditions imposed by the Bundeswehr and on a
special legal basis, namely the UZwGBw.
I-8213
OPINION OF MR COSMAS —JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
tant, does not affect the freedom of the awardee
to the extent that it could no longer be held
to have certain powers of organisation vis-
à-vis the economic entity in question.
151. The national court observes that the
contractor is required not to deploy those
security guards on other sites; however, the
same situation could arise, for example, in
connection with the guarding of a bank. The
contractor must provide certain equipment
(uniform, armbands, a weapon, truncheon,
whistle, torch, first-aid pack, security equip­
ment etc.). Clearly, all these factors must be
taken into account in determining whether
there are grounds for speaking of an economic
entity which the contractor is, at least to some
extent, responsible for organising.
152. Moreover, even in cases where cleaning
services or guard duties, for example, are
entrusted by an undertaking 79 to an outside
firm, the client very often specifies the hours
to be worked, requires or prohibits the use of
certain raw materials, lays down certain ele­
mentary security rules, and may even insist
on inspecting the staff assigned to the services
or duties in question or refuse to admit to the
workplace anyone unconnected with the ser­
vice or duties. Similar circumstances might
arise in the case of an undertaking that takes
on the job of maintaining the gardens of a
business or private client, or running a can­
teen on the premises of a business.
153. In my view, it follows that the first body
to which the contract is awarded has a cer­
tain, albeit small, degree of freedom in the
way in which it organises the economic entity
'maintenance of site security' and performs
the tasks assigned to it. Similarly, the contrac­
tor's duties are not limited solely to sup­
plying, for consideration, security personnel
with whom it has concluded a contract of
employment and the Commission's arguments
to the contrary must be rejected as being
without foundation.
154. Consequently, in so far as the
Bundeswehr decides to contract out the
responsibility for providing a particular ser­
vice to an undertaking (the first contractor),
on the terms reported by the national court
— which, incidentally, is responsible for veri­
fying the facts — and since the economic
entity retains its identity even after the transfer
and the contractor has a certain, albeit lim­
ited, power to organise that economic entity,
I can accept that that entity did not remain in
the hands of the Bundeswehr after the first
contract was awarded.79 — For example, a museum, a bank, a block of flats or offices,
etc.
I - 8214
HERNÁNDEZ VIDAL AND OTHERS
(iii) The transfer of part of a business
155. In the light of the foregoing consider­
ations, I take the view that in the circum­
stances described by the national court we arc
indeed dealing with an economic entity ('main­
tenance of site security' at the medical sup­
plies depot at Efringen-Kirchen), which was
owned by the first contractor.
156. However, to ascertain whether there was
a transfer from the first contractor to the
second after termination of the contract, it is
necessary to refer to the various criteria derived
from the case-law of the Court, which the
national court must take into account, bearing
in mind the specific nature of the activity at
issue. According to the documents in the case,
it is an activity in which the human factor is
paramount and the tangible or intangible
assets are clearly of lesser importance.
157. In other words, it is an organised group
of workers, specifically engaged in a joint
activity. I sec no reason, therefore, why that
group, which constitutes an economic entity,
cannot be transferred whenever, irrespective
of any similarity in the duties performed, the
new employer takes over all or a majority of
the employees (in terms of their numbers and
skills) who were assigned specifically to the
performance of the contract by the previous
contractor and is thus able to ensure that the
guarding of the medical supplies depot con­
tinues smoothly, even if no other significant
tangible or intangible assets are transferred.
158. This conclusion is supported by the fact
that, in the words of the order for reference,
essentially the same employees continue to
perform the same security duties on terms
which are virtually identical, even though
they are determined to a large extent by the
body awarding the contract. 80
(b) The mode of the transfer
(i) The second limb of the first question
159. In the second limb of the first question,
the national court seeks to ascertain whether
the Directive is applicable where the transfer
takes the form not of a direct transfer between
two undertakings but of the termination of a
contract with one undertaking and its award
to another following an invitation to tender.
160. I would merely point out in this con­
nection that the mode of transfer — that is to
say, the question whether it was effected by
means of termination of the contract, a call
for tenders and the award of a new contract
80 — I should point out that the national court states (point II.4
in fine) that, according to Mr Ziemann, Morst Bohrt took on
nine of the twelve employees engaged in security duties at
the medical supplies depot at Efringen-Kirchen and
Mr Ziemann was the only employee (apart from one other
of the older employees) to be dismissed, the reason given
being that the body awarding the contract considered him
to be too old for security duties. The Commission states (at
point 7 of its written observations) that a third employee left
the company of his own accord.
I-8215
OPINION OF MR COSMAS —JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
to a different undertaking — matters little,
provided that the conditions, specified by the
Court and set out in its judgment in Süzen,
for determining whether or not there has been
a transfer are satisfied. The rules applicable in
the event of the termination of a (site security
maintenance) contract followed by the award
of a new contract without any prior invita­
tion to tender will therefore apply in the
present case mutatis mutandis. Moreover, the
Court has consistently ruled that there is no
need for any direct contractual relationship
between the new contractor and its predeces­
sor 81 for there to be a 'legal transfer' within
the meaning of the Directive. 82
(ii) Question 2: the importance of the interval
between the two contracts
161. In its second question, the national court
seeks to ascertain also whether, for the Direc­
tive to apply, it is significant that in the present
case, on termination of the contract with the
first undertaking, 83 the part of the business
represented by the maintenance of site secu­
rity at the medical supplies depot reverted to
the body awarding the contract, 84 and was
thereupon immediately contracted out to
another undertaking 85 under a contract for
the supply of services stipulating essentially
the same standard conditions. The national
court inquires, therefore, whether the fact that
a new contract was concluded immediately
with another contractor, on effectively the
same terms, decisively supports a finding that
the 'site security maintenance' part of the
business was transferred and thus a transfer
of part of a business was effected by means of
a prior call for tenders.
162. I take the view that there must be a close
temporal connection between the termination
of a contract and its award to another operator.
It is for the national court to determine the
length of the interval in question in the light
of the facts and the nature of the business in
each particular case.
163. In any event, I consider that it is essen­
tial to maintain the useful effect of the protec­
tive provisions of the Directive in the event
of a transfer of a business. That protection
would not be assured if the provisions in
81 — Thus, the Court has held that the Directive applies to the
termination of a lease of a restaurant followed by the con­
clusion of a new management contract with another operator
(Daddy's Dance Hall, cited in footnote 14 above), the ter­
mination of a lease followed by a sale by the owner (Bark,
cited in footnote 22 above), and also a situation in which a
public authority ceases to grant subsidies to a legal person
thereby bringing about the full and definitive termination of
its activities in order to transfer them to another legal person
with a similar aim (Redmond Stichting, cited in footnote 14
above). In paragraphs 30 and 32 of its judgment in Merckx
and Neuhuys, cited in footnote 23 above, it held that the
Directive applied to a situation where a motor vehicle deal­
ership concluded with one undertaking is terminated and a
new dealership is awarded to another undertaking pursuing
the same activities, which takes on part of the staff and is
recommended to customers, without any transfer of assets.
82 — I should mention that, because of the discrepancies between
the versions of the term 'legal transfer' in the various lan­
guages, the Court has given it a broad interpretation, in
keeping with the aim of the Directive, which is to protect
employees. Thus, it has consistently ruled that the Directive
is applicable 'wherever, in the context of contractual rela­
tions, there is a change in the legal or natural person who is
responsible for carrying on the business and who incurs the
obligations of an employer towards employees of the under­
taking'. See, for example, Bork and Redmond Stichting, cited
in footnotes 22 and 14 above, paragraphs 13 and 11 respec­
tively.
83 — In this case, Ziemann Sicherheit.
84 — The Bundeswehr.
85 — Horst Bohn.
I-8216
HERNÁNDEZ VIDAL AND OTHERS
question were not allowed to apply in a case
where a long-standing 'site security mainte­
nance' contract, performed within an under­
taking by a security unit, is terminated without
being immediately transferred to another secu­
rity outfit. As the Commission rightly
observes (in point 47 of its written observa­
tions), it is for the national court, 86 when
considering whether the part of the business
in question remained the same after the transfer
as before, to determine whether there is indeed
such a close temporal connection.
164. That said, it should be noted that, in the
light of the information provided in the order
for reference, this question does not appear to
arise in the present case, because the close
temporal connection between termination of
the Bundeswehr's contract with the first
undertaking (Ziemann Sicherheit) 87 and its
award of the new contract to the second
undertaking (Horst Bohn) may be regarded
as established, 88 since the transition from one
to the other 89 occurred directly, without any
lapse of time.
VI — Conclusion
165. I therefore propose that the Court give the following answers to the questions
referred by the national courts:
A — Joined Cases C-127/96, C-229/96 and C-74/97
(1) Question 1 in Case C-127/96, Hernández Vidal, and Question 1 in Case
C-229/96, Friedrich Santner
'Article 1 of Council Directive 77/187/EEC of 14 February 1977 on the approxima­
tion of the laws of the Member States relating to the safeguarding of employees'
86 —• The Commission rightly points out (at point 48 of its written
observations) that the type of transfer and the calibre of the
staff re-engaged may provide useful clues for determining
the length ottime during which a business may still effec­
tively be transferred after the termination of the old contract
and before the new one commences. Thus, where the new
operator must first be selected by means of a lengthy ten­
dering procedure, the interval may be longer than in cases
where part of a business is transferred by a direct change of
contractor. The interval allowed may also be more generous
where the work to be entrusted to the new contractor is
highly skilled, so that it will take longer to find a suitable
undertaking or contractor than it would if the activities
could be performed by any one of a number of undertak­
ings or contractors.
87 — On 30 September 1995.
88 — Mr Ziemann's action against Ziemann Sicherheit and Horst
Bohn was brought on 9 October 1995.
89 — According to the Commission, the contract was awarded to
Horst Bohn on 1 October 1995.
I-8217
OPINION OFMR COSMAS—JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
rights in the event of transfers of undertakings, businesses or parts of businesses is
to be interpreted as meaning that the work of cleaning the premises of an under­
taking, an.activity for which it has a permanent need although its main business is
not cleaning, may fall within the scope of the Directive if it is carried out by a stable
group of employees pursuing a specific objective, that is to say, if there is an eco­
nomic entity and that entity retains its identity after the transfer.'
(2) Question 2 in Case C-127/96, Hernandez Vidal; Question 2 in Case C-229/96,
Friedrich Santner; and the question in Case C-74/97, Gómez Montaña
'Article 1(1) of Directive 77/187 is to be interpreted as meaning that the Directive
is not applicable in a situation in which one undertaking, having entrusted the
cleaning of its premises to another, terminates the contract and takes over the
cleaning operation itself, using its own employees or staff engaged for that purpose,
unless there is a concomitant transfer from one undertaking to the other of signifi­
cant tangible or intangible assets, or unless — in sectors such as cleaning services,
in which the workforce is the main production factor — the first-mentioned under­
taking takes over a major part, in terms of their numbers and skills, of the employees
assigned by its predecessor to the performance of the contract.'
B — Joined Cases C-173/96 and C-247/96
(1) The question in Case C-173/96, Sánchez Hidalgo
'Article 1 of Council Directive 77/187/EEC of 14 February 1977 on the approxima­
tion of the laws of the Member States relating to the safeguarding of employees'
rights in the event of transfers of undertakings, businesses or parts of businesses is
to be interpreted as meaning that the service of home help for persons in need may
fall within the scope of the Directive, even where no significant tangible or intan­
gible assets are involved, if it is carried out by a stable group of employees pursuing
a specific objective, that is to say by an economic entity, and that entity retains its
identity after the transfer.
Article 1(1) of Directive 77/187 is to be interpreted as meaning that the Directive
may apply where an undertaking which had entrusted the service of home help for
I-8218
HERNÁNDEZ VIDAL AND OTHERS
persons in need to another undertaking entrusts the same service to a third under­
taking on expiry of the first contract, provided that the latter takes over a major
part, in terms of their numbers and skills, of the employees assigned by its prede­
cessor to the performance of the contract, even if there is no concomitant transfer
from one undertaking to the other of significant tangible or intangible assets.
The protection afforded by the provisions of Directive 77/187 to employees in the
event of a change of employer following a transfer of an undertaking, business or
part of a business cannot depend on whether or not the new employer is formally
required, under a collective agreement or tendering conditions, to be subrogated to
the former vis-à-vis its employment relationship with the workers, since the exist­
ence of a transfer of an undertaking, business or part of a business within the
meaning of the Directive depends on a range of circumstances, in fact and in law,
characterising the transaction in question.'
(2) Case C-247/96, Horst Ziemann
(a) The first part of Question 1
'Council Directive 77/187/EEC of 14 February 1977 on the approximation of the
laws of the Member States relating to the safeguarding of employees' rights in the
event of transfers of undertakings, businesses or parts of businesses is to be inter­
preted as meaning that a transfer of an undertaking, business or part of a business
cannot be ruled out merely on the ground that, on the basis of the applicable legal
or contractual provisions, the body awarding the contract exerts a direct influence
over the awardee with respect to the manner in which the contract is performed. A
case of this kind may fall within the scope of the Directive if there is a stable group
of employees pursuing a specific objective, that is to say, an economic entity, and
that entity retains its identity after the transfer.'
(b) Question 3
'Article 1(1) of Directive 77/187 is to be interpreted as meaning that the Directive
is applicable where the body awarding the contract terminates its contract with the
I-8219
OPINION OF MR COSMAS—JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96
awardee and awards a new contract to another, if, in sectors such as the protection
of premises, where the workforce is the main factor, and in cases where essentially
the same employees continue to perform the same tasks in the same place and on
essentially the same terms, the new awardee takes over a major part, in terms of
their numbers and skills, of the employees assigned by its predecessor to perfor­
mance of the contract.'
(c) The second part of Question 1, and Question 2
'Article 1(1) of Directive 77/187 is to be interpreted as meaning that a transfer of
an undertaking cannot be ruled out merely on the ground that the body awarding
the contract has terminated a contract with one awardee for services such as the
protection of premises and entrusted the same tasks within a reasonable length of
time to another, following an invitation to tender, without any direct legal transfer
between the first awardee and the second.'
I - 8220