Judgment — ECLI:EU:C:2000:441
Date: 2000-09-14
Language of the case: Italian
Court formation: Sixth 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: Italy

summary, it may be 
concluded that the nature of the transferred 
activity in the main proceedings is not such 
as to exclude application of the directive. 
(b) On the question of a 'legal transfer' 
52. As regards the additional requirement 
of a legal transfer, reference should be made 
to the Redmond Stichting 38 judgment. The 
question in that case was whether there is a 
transfer of an undertaking where a local 
authority stops paying subsidies to a foun­
dation, and simultaneously begins paying 
the subsidies to another foundation which 
is active in the same field. The cessation of 
support had the result that the former 
foundation, which was chiefly engaged in 
providing support for drug addicts, brought 
its activities to a complete halt. But both 
the foundations, which were legal persons, 
and the subsidising body, the local author­
ity, had not only intended and agreed that 
'the clients/patients of the first legal person 
should be "switched" to the second legal 
person but also that, thereupon, a lease 
should be granted to the second legal 
person of the immovable property leased 
by the first legal person from the subsidis­
ing body and that, so far as is possible... use 
should be made of the "knowledge and the 
resources (e.g. staff)" of the first legal 
person'. 39 The employees working for the 
first foundation on the basis of contracts of 
employment, who were not taken over by 
the second foundation and against whom 
proceedings were brought to end their 
employment contracts, relied on the rules 
in Netherlands law for the transposition of 
the directive. 
53. In this judgment the Court gave a 
detailed explanation of the concept of a 
'legal transfer'. It began by recalling its 
finding in the Abels 40 case 'that the scope 
of the provision at issue could not be 
appraised solely on the basis of a textual 
interpretation on account of the differences 
between the language versions of the pro­
vision and the divergences between the 
laws of the Member States with regard to 
the concept of legal transfer. It has there­
fore given that concept a sufficiently flex­
ible interpretation in keeping with the 
objective of the directive, which is to 
37 — OJ 1990 L 192, p. 10. 
38 — Case C-29/91 (cited in footnote 29). 
39 — Case C-29/91 (cited in footnote 29, paragraph 6). 
40 — Case 135/83 (cited in footnote 27). 
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COLLINO AND CHIAPPERO 
safeguard employees in the event of a 
transfer of their undertaking, and has held 
that the directive is applicable wherever, in 
the context of contractual relations, 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'. 41 The directive does not become 
inapplicable merely because 'the transfer is 
effected in two stages, inasmuch as the 
undertaking is first re-transferred from the 
lessee to the owner and the latter then 
transfers it to the new owner'. 42 On the 
basis of these considerations, the Court 
came to the view in the Redmond Stichting 
case that the expression 'legal transfer' is to 
be interpreted so that 'the expression covers 
a situation in which a public authority 
decides to terminate the subsidy paid to one 
legal person, as a result of which the 
activities of that legal person are fully and 
definitively terminated, and to transfer it to 
another legal person with a similar aim'. 43 
54. From the foregoing it may be conclu­
ded that in the present case likewise, 
application of the directive will not fail 
because the transfer was effected by the 
State through the grant of a concession. 
Moreover, its application seems to be 
necessary in order to meet the protective 
aim of the directive. 
Personal scope — the concept of an 
employee 
55. The order for reference gives no further 
details about the exact nature of the 
employment relationship between the 
plaintiffs and the original employer. It is 
not clear whether they were public officials 
or civil servants of some other kind. This 
distinction notwithstanding, the question 
thus arises in the present case of the 
applicability of the directive in respect of 
the concept of an employee since it is not 
certain whether persons who have been 
working for a State enterprise may be 
regarded as employees for the purpose of 
the directive. 
56. According to the consistent case-law of 
the Court, the harmonisation achieved by 
the directive is only partial, because it 
essentially extends the protection already 
secured for employees through the legal 
rules of the individual Member States to 
cases in which undertakings have been 
taken over. It is not an attempt to create a 
uniform level of protection for the whole 
Community on the basis of common cri­
teria, and it follows that 'Directive 
No 77/187 may be relied upon only by 
persons who are, in one way or another, 
protected as employees under the law of the 
Member State concerned. If they are so 
protected, the directive ensures that their 
rights arising from a contract of employ­
ment or an employment relationship are 
not diminished as a result of the transfer'. 44 
41 — Judgment in Case C-29/91 (cited in footnote 29, paragraph 
10 et seq.) with reference to the judgment in Case 101/87 
Bork International [1988] ECR 3057, paragraph 13. 
42 — Case 101/87 (cited in footnote 41, paragraph 14). 
43 — Case C-29/91 (cited in footnote 29, paragraph 21). 
44 — Case 105/84 Danmols Inventar [1985] ECR 2639, para­
graph 26 et seq. 
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OPINION OF MR ALBER — CASE C-343/98 
— Arguments of the parties 
57. The Finnish Government and the Com­
mission take the view that the plaintiffs in 
the main proceedings are covered by the 
personal scope of the directive. The Finnish 
Government relies primarily on the Court's 
case-law, under which the directive applies 
to all workers or employees who are 
protected from dismissal under national 
law. It argues that even if the concept of an 
employee is to be defined according to 
national rules, neither the wording of the 
directive nor the case-law of the Court 
indicates that employment relationships in 
the public service are automatically to be 
excluded from the scope of the directive on 
the basis of purely formal considerations. 
What matters here is the nature of the 
activity performed. If it is an economic 
activity, the fact that the employer is the 
State or a public entity is irrelevant. One 
cannot exclude all State employees from 
the scope of the directive on the basis of 
considerations of form. 
58. The Commission too, having stated 
that the plaintiffs in the main proceedings 
had probably been in a public law employ­
ment relationship, so that under Italian law 
they would not have been employees, 
focuses initially on the nature of the 
activity. It argues that since the plaintiffs 
in the main proceedings were carrying on 
the same activity as that exercised subse­
quently by the employees of the private 
undertaking, they cannot be excluded from 
the scope of the directive. 
59. The Commission also refers to the 
preparatory work for the directive, the 
two drafts of 1974 and 1975, which in 
Article 3(1) referred merely to an 'employ­
ment relationship' and thus would have 
governed the rights and duties arising from 
an existing employment relationship. Dur­
ing consultations the French delegation had 
suggested adding the term 'contract of 
employment' in Article 3(1). These two 
terms 'contract of employment' and 
'employment relationship' were then also 
transferred to Article 4(2). No reasons are 
given in the records for this addition of 
another term. It is however indisputable 
that both France and Italy, during the 
1970s, ran many State enterprises and that 
the employment relationships in them were 
governed by administrative law. 
60. In the Commission's opinion, the terms 
'contract of employment' and 'employment 
relationship' are not equivalent in meaning. 
The concept of an 'employment relation­
ship', by contradistinction to a 'contract of 
employment', should be interpreted to 
bring within the scope of the directive all 
employees whose employment relationship 
is governed not by a contract but by 
administrative provisions. This concept 
could play an important inclusive role, by 
ensuring that the directive will also apply in 
the event of State enterprises being trans­
ferred. On the basis of this broad interpre­
tation and by analogy with the concept of 
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COLLINO AND CHIAPPERÒ 
the employment relationship, this would 
fulfil the aims of the directive by affording 
protection to employees in a State enter­
prise whose duties are similar to those of 
employees of private companies to which 
the undertakings have been transferred. 
— Opinion 
61. It is questionable whether the focus on 
the nature of the activity — economic 
activity as distinct from functions of public 
authority — is sufficient in itself to define 
the personal scope of the directive. Refer­
ence should be made here to the Sánchez 
Hidalgo judgment, 45 in which the Court 
held that the directive was applicable 
because the main proceedings did not 
concern the exercise of public authority. If 
that was all that mattered, all employees — 
civil servants as well as ordinary employ­
ees — who do not perform functions of 
public authority would automatically be 
covered by the directive. But in the Sanchez 
Hidalgo judgment the Court went on, 
referring to the judgment in Danmols 
Inventar, to consider further whether the 
employees were each 'protected as an 
employee under national labour law'. 46 
62. This would mean that only employees 
of a public entity or State undertaking who 
are protected as workers under national 
law are covered by the directive. All others 
would be excluded, even if they were only 
performing an economic function. But this 
would very frequently be the case when a 
State enterprise is privatised. 
63. Even the distinction argued by the 
Commission between the terms 'contract 
of employment' and 'employment relation­
ship' does not necessarily result in the scope 
of the directive being extended to State 
employees. The distinction between the 
two terms could also be that the concept 
of an 'employment relationship' embraces, 
for example, actual employment relation­
ships without a contractual basis. In any 
event, it would not necessarily mean that 
employment relationships in the public 
service are covered. 
64. But a strict interpretation of the con­
cept of an employee would result in a 
distinction being drawn between the indi­
vidual employees of a public entity, so that 
some would be covered by the directive and 
others not. It is doubtful whether such a 
distinction would be sensible. 
65. One reason for this difference of treat­
ment could be the special position occupied 
by civil servants vis-a-vis their employer, 
the State. This relationship could be 
described as a special relationship of trust, 
possibly involving special privileges for the 
employees. In that light, State employees 
could not be regarded as being in need of 
protection. Moreover, as a general rule they 
45— Joined Cases C-173/96 and C-247/96 (cited in footnote 
24). 
46 — Judgment in Joined Cases C-173/96 and C-247/96 (cited in 
footnote 24, paragraph 24) with reference to the judgment 
in Case 105/84 (cited in footnote 44) and the judgment in 
Case C-29/91 (cited in footnote 29). 
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OPINION OF MR ALBER — CASE C-343/98 
are not affected by takeovers and mergers. 
It could therefore be assumed that the 
directive does not apply to the employees 
of the former State telephone company. 
66. It cannot however be assumed in prin­
ciple that a civil servant is adequately 
protected by national law because of his 
or her special position, even in the event of 
privatisation. The present case is thus a 
special case, precisely with respect to the 
concept of 'employee'. Here people work­
ing in the public service are affected by a 
transfer, with the result that they switch 
over from their possibly privileged position, 
derived from their 'special relationship of 
trust' to the employer, to an ordinary 
private law employment relationship. This 
means that once the privatisation has taken 
place, they are indisputably employees 
within the meaning of the directive. Against 
this background it seems questionable 
whether the strict formal delimitation in 
line with the previous concept of an 
employee should apply in this case too. If 
it did, the directive would not be applicable 
in the event of privatisation, whereas in the 
reverse situation — where employees 
switch over from a private employment 
relationship to a employment relationship 
in the public service — this would probably 
fall at least within the personal scope of the 
directive. In this case the question arises 
whether State employees who are taken 
over by private industry are not just as 
deserving of protection as private sector 
workers who switch to a specially pro­
tected relationship as State employees. 
67. In this connection one has to bear in 
mind what the directive is seeking to 
achieve. According to the consistent case-
law of the Court, the directive is intended 
to safeguard the rights of employees when 
there is a change of ownership of the 
undertaking, by making it possible for 
them to continue to work for the new 
employer under the same conditions as 
agreed with the transferor. 47 The contracts 
of employment or employment relation­
ships are thereby continued, ipso jure, with 
the transferee. 48 
68. Where the case-law indicates that the 
directive gives workers the option of con­
tinuing their employment relationship with 
the new owner under the same terms as had 
been agreed with the transferor, 49 this 
means that there should be no change in 
salary conditions and no change in the 
composition of the salary. 50 Moreover, the 
employees should not suffer any disadvan­
tages, even if these are offset by gains 
elsewhere. 51 This means that there cannot 
be any change in the conditions of employ­
ment as a result of the transfer. 
47 — Case C-362/98 D'Urso [1991) ECR I-4105, paragraph 9, 
and Joined Cases 144/87 and 145/87 Berg and Others 
[1988] ECR 2559, paragraphs 12 and 13. 
48 — Case C-362/98 (cited in footnote 47, paragraph 12). 
49 — Case 324/86 (cited in footnote 22, paragraph 9). 
50 — Case C-209/91 Watson Rask and Christensen [19921 ECR 
I-5755, paragraph 31. 
51 — Case 324/86 (cited in footnote 22, paragraph 15). 
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COLLINO AND CHIAPPERÒ 
69. In the present instance of privatisation 
of a State undertaking, this would mean 
that on application of the directive all the 
benefits granted to the employees in the 
public service are transferred without 
alteration to the private sector. 
70. Otherwise, on a strict interpretation of 
the concept of an employee, no protection 
would be afforded to State employees in the 
event of privatisation, although they are 
losing their special position vis-a-vis the 
State. 
71. The fact that the directive does not 
expressly mention privatisation, such as has 
occurred in this case, does not warrant the 
conclusion that the employees in such a 
case are to be excluded from the protection 
of the directive. The directive dates from 
1977, namely from a time when privatisa­
tion of State enterprises was not yet the 
norm. It might therefore be assumed that 
this development was not contemplated 
when the directive was adopted. 
72. It must of course be borne in mind that 
there is no more extensive concept of an 
employee in the new directive of 1998. 52 
Admittedly, the new directive is not yet 
applicable to the case at issue in the main 
proceedings, since it only came into force 
subsequently. However, it is clear from the 
recitals in its preamble 53 that it is intended 
to clarify the concept of an employee in the 
light of the case-law adopted by the Court 
in the meantime. The difficulty of achieving 
a uniform definition of an employee was no 
doubt already evident when Directive 
77/187 was in preparation. It is uncertain, 
however, how far it was intended, on that 
occasion and in the drafting of Directive 
98/50, to extend the protection of the 
directive to employees in the public service, 
especially in the event of privatisation. In 
any case, the legislature omitted to regulate 
this point clearly. Three possible conclu­
sions could be drawn from this. First, it 
could be concluded that State employees, 
or civil servants, were deliberately left out 
of the protection under the directive. It is 
equally conceivable that it was found 
impossible to agree on whether, and how, 
State employees were to be covered by the 
directive. A third explanation could be that 
because of the different national formula­
tions it was not possible to harmonise the 
concept of a worker. 
73. While no attempt at all was made by 
the Community legislature to define the 
concept of an employee in the original 
directive, which is the one relevant to the 
solution of the present dispute, the new 
directive confines itself to codifying a 
definition of the concept which was devel­
oped in the case-law for a particular type of 
case. Since, however, the Court has not yet 
had to deal with questions of privatisation, 
such a case cannot be embraced by the 
concept of a worker as it derives from the 
case-law. 
74. Moreover, in Case 105/84, 54 in which 
the Court defined its previous understand-
52 — Cited in footnote 25. 
53 — Sixth recital. 54 — Cited in footnote 44. 
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OPINION OF MR ALBER — CASE C-343/98 
ing of what an employee is, the facts were 
quite different. In that case it was a 
question of clarifying whether a person 
holding a 50% share in the company 
concerned is to be regarded as an employee 
when the undertaking is transferred. The 
definition of an employee was not therefore 
made with a view to the distinction 
between the private and the public sectors, 
but only with a view to distinguishing 
employees from employers. 
75. The language of Council Directive 
93/104/EC of 23 November 1993 concern­
ing certain aspects of the organisation of 
working time 55 could, admittedly, be said 
to stand in the way of an extension of the 
existing concept of an employee. Arti­
cle 1(3) of this directive defines its scope 
as extending to all private and public 
sectors of activity. It refers, in this connec­
tion, to Article 2 of Council Directive 
89/391/EEC of 12 June 1989 on the intro­
duction of measures to encourage improve­
ments in the safety and health of workers at 
work. 56 Here too, both private and public 
activities are mentioned. It is also provided 
that Directive 89/391 will not apply where 
there are compelling reasons derived from 
the particular features of certain specific 
public service activities. Since, therefore, 
Directive 93/104 specifically mentions the 
public service, and thus covers all employ­
ees of private and public sector activities, 
the fact that the public service is not 
mentioned in Directive 77/187 could 
prompt the conclusion that in the latter 
directive there is no intention to extend the 
concept of an employee to the public 
service. 
76. As regards the special rights enjoyed by 
State employees, such as protection from 
dismissal, it is conceivable that they are not 
intended to fall within the directive on 
safeguarding the rights of employees of 
workers when undertakings are transfer­
red. However, this is a benefit which is not 
confined to the public service. It is quite 
conceivable that in the private sector also, 
there is a form of protection virtually 
equivalent to protection from dismissal 
available under collective agreements to 
those with long records of service. This too 
shows that it cannot be simply assumed 
that State employees are invariably in a 
privileged position and therefore enjoy 
special protection if an undertaking is taken 
over. 
77. On the other hand, it is the aim of the 
directive to afford special protection to 
those affected by the transfer of an under­
taking. In this connection, it should also be 
pointed out that according to the case-law 
of the Court 57 the affected workers, 
because of this protective purpose, cannot 
even themselves waive their rights under 
the directive, and that it is not permissible 
to curtail these rights, even with their 
consent. On the other hand, the Court 
55 — OJ 1993 L 307, p. 18. 
56 — OJ 1989 L 183, p. 1. 57 — Case 324/86 (cited in footnote 22, paragraphs 15 to 17). 
I - 6682 
COLLINO AND CHIAPPERO 
points out that the directive effects only a 
partial harmonisation, because what it 
essentially does is to extend the protection 
already afforded to workers under the law 
of the individual Member States to the case 
of takeovers of undertakings. 'Thus the 
directive can be relied on only to ensure 
that the employee is protected in his 
relations with the transferee to the same 
extent as he was in his relations with the 
transferor under the legal rules of the 
Member State concerned Consequently, in 
so far as national law allows the employ­
ment relationship to be altered in a manner 
unfavourable to employees in situations 
other than the transfer of an undertaking, 
in particular as regards their protection 
against dismissal, such an alternative is not 
precluded merely because the undertaking 
has been transferred in the meantime and 
the agreement has therefore been made 
with the new employer. Since by virtue of 
Article 3(1) of the directive the transferee is 
subrogated to the transferor's rights and 
obligations under the employment relation­
ship, that relationship may be altered with 
regard to the transferee to the same extent 
as it could have been with regard to the 
transferor, provided that the transfer of the 
undertaking itself may never constitute the 
reason for that amendment.' 58 
78. Indeed the directive itself provides that 
the terms of employment may be altered for 
other reasons, independent of the transfer. 
For instance, under Article 4(1), a dismissal 
is not possible solely because of the trans­
fer. However, dismissals for economic, 
technical or organisational reasons are not 
prohibited by the directive. Moreover, 
according to Article 3(2) the terms and 
conditions agreed in a collective agreement 
must be continued until its termination or 
expiry, to the same extent as provided in 
the collective agreement for the transferor. 
According to Article 3(2), second sentence, 
the Member States may however limit the 
period for observing them, provided it 
continues for at least one year. 
79. Accordingly, application of the direc­
tive to State employees who are transferred 
along with the undertaking to the private 
sector would not result in expanding 
unduly the protection granted by the direc­
tive. Since, as already discussed, on a 
narrow interpretation of the concept of an 
employee the protective aim of the directive 
cannot be fulfilled in this case, it should be 
assumed that at least the rights concerned 
in the present case are covered, by virtue of 
the general purpose of the directive. 59 
58 — See footnote 57. 
59 — The Council's reasoning in 1974 on the proposed draft 
directive on the takeover of undertakings also points in this 
direction. Here the Council states that the legal systems of 
the individual Member States in the field of concentration 
of undertakings would not pay sufficient heed to the 
interests of employees. This was especially the case where 
the changes were made under the rules of civil and 
commercial law. While here the emphasis is on the civil 
and commercial law field, it also indicates that other areas 
of law were in contemplation, so that the public law field 
could certainly not be excluded (COM (74) 351 final). 
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OPINION OF MR ALBER — CASE C-343/98 
80. These various considerations also show 
that it would be appropriate, where direc­
tives are intended to protect workers, to 
adopt a (broad) uniform concept of an 
employee. 
81. Finally, I must add that the application 
of the directive cannot be excluded on the 
ground that under Italian law, the plaintiffs 
would have had the option of remaining in 
the public service. As in this case the 
plaintiffs would have taken over a new 
function in the administration, remaining 
in the public service would necessarily have 
involved a change of workplace and activ­
ity, and possibly also a change of location. 
If the plaintiffs wanted to remain in their 
previous occupation with minimum altera­
tion of the outward circumstances of their 
employment, they had no choice other than 
to leave the public service and continue 
their previous occupation with Iritel in a 
form of employment governed by private 
law. In that situation, a worker should be 
protected by the directive. It would be 
illogical to deny him or her such protection 
merely because he did not accept an offer of 
further employment from the transferor 
and former employer in another occupa­
tion. This conclusion is also borne out by 
the case-law of the Court, according to 
which the legal consequences of the trans­
fer of an undertaking are independent of 
the will of the employee. The only excep­
tion will be a case in which the employee 
voluntarily declines to continue the 
employment relationship with the new 
employer. 60 But the complete opposite is 
true in the present case. The persons 
affected by the transfer of the undertaking 
are not objecting to further employment 
with the transferee; they did not take up an 
offer to remain with the transferor. This 
does not affect their legal position under 
the directive. 
82. In the light of the foregoing considera­
tions it seems appropriate here to bring the 
State employees who are switching over to 
private sector employment because of the 
privatisation within the protection of the 
directive. 
83. The answer to Question a) should 
therefore be that a transfer for value, 
authorised by law promulgated by the State 
and implemented by ministerial decree, of 
an undertaking which is transferred from a 
public entity owned directly by the State to 
a private company belonging to another 
public entity which holds all its shares falls 
within the scope of Article 1 of Directive 
77/187 if the private company is entrusted 
under an administrative concession with 
the activity which is the subject of the 
transfer. 
III — Question b1 
84. In the context of Question b1 the 
problem arises of determining the nature 
of the individual claims which are transfer-60 — Case C-362/89 (cited in footnote 47, paragraph 11). 
I - 6684 
COLUNO AND CHIAPPERÒ 
red, i.e., ascertaining which terms of 
employment are maintained. Question b1 
relates to the plaintiffs' right to a certain 
payment for length of service, and the 
manner in which it is calculated. 
Arguments of the parties 
85. The plaintiffs here rely on the binding 
character of Article 3(1) of the directive, 
from which they argue that the employees 
transferred from ASST to Iritel can rely on 
their length of service to obtain a single 
payment. Admittedly, in the oral procedure 
the plaintiffs conceded that a single calcu­
lation of the length-of-service payment 
would have been possible under Italian 
law. However, for this to take place it 
would have been necessary to pay in to the 
new employer the length-of-service pay­
ment paid by ASST within 30 days of the 
transfer of the undertaking. But this time 
limit was far too short, and this was the 
reason why the plaintiffs were not able to 
act in time. 
86. The defendant points out that under 
Italian law the plaintiffs could have 
received a uniform length-of-service pay­
ment if they had paid in the payment 
received from ASST. On the other hand, 
as far as the obligations under the directive 
are concerned, according to Article 3(1) the 
transferee must accord the employees the 
rights which existed with the transferor 
immediately before the transfer. It is not, 
however, the purpose of the directive to 
grant retrospectively to an employee who 
retains his rights from the previous employ­
ment relationship benefits from his new 
employer for the period of employment 
prior to the transfer. The length-of-service 
payment for the years prior to the transfer 
may therefore only be calculated according 
to the criteria of ASST, and for the period 
following the transfer according to the rules 
which applied at Iritel and subsequently to 
the defendant. 
87. In the view of the Austrian and Finnish 
Governments, as well as of the plaintiffs, 
the effect of Article 3 is that all rights and 
advantages attached to length of service are 
transferred or maintained. In this connec­
tion, the Austrian Government recalls, 
however, that the directive does not prevent 
subsequent variation of the employment 
contract by the transferee, if national law 
permits the variation independently of the 
transfer of the undertaking. 
88. The Commission contends that the 
transferee is bound, under Article 3 of the 
directive, by all the obligations of the 
transferor arising from the employment 
relationship as it was at the time of the 
transfer. However, it takes the view that 
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OPINION OF MR ALBER — CASE C-343/98 
Law No 58/92 does not provide very clear 
rules on this point. 
89. The Commission adds that according 
to the case-law, however, all obligations 
arising from the contract pass to the 
transferee, and under Article 3(2) this has 
also been extended to collective agree­
ments. This prompts the conclusion that 
length of service is maintained for the 
purpose of the length-of-service payment. 
This would give the employees the right to 
payment of a single payment, covering the 
years of service with both the old and the 
new employer. 
Opinion 
90. In this context I recall again the Court's 
case law mentioned in points 67 and 68, 
stating that the continuation of the employ­
ment relationship in its original form is to 
be secured 61 and there should be the 
possibility of continuing the employment 
under the same terms. 62 It is, after all, the 
meaning and purpose of Article 3 of the 
directive to protect employees from the 
specific risks resulting from the situation in 
which an undertaking is transferred. The 
rule is therefore intended to guarantee the 
continuance of the employment relation­
ship' in every respect, and to exclude any 
change to the rights of the employees solely 
on the basis of the transfer. 
91. In itself, however, length of service does 
not constitute a right or entitlement which 
could be transferred with the undertaking 
and be claimed from the transferee. It is 
conceivable only that rights associated with 
length of service may be transferred. The 
employee's right will accordingly consist of 
his claim for payment of a length-of-service 
payment which is part of the legal terms of 
his former employment. This severance 
claim is divided into two legally relevant 
aspects, the basis of the entitlement and its 
amount. 
92. If there is an entitlement to a length-of-
service payment from the former employer 
and transferor, Article 3 of the directive 
requires this entitlement to be transferred in 
respect of both elements, viz. the ground of 
the entitlement and its amount, so that it 
can subsequently be claimed from the 
transferee. This means that the new 
employer and transferee is bound to deter­
mine the amount of the severance pay due 
according to the method of calculation 
applied by the transferor. Length of service 
must be taken into account in this process. 
The transferee is also bound by the other 
conditions for claiming the length-of-ser­
vice payment in the transferred employ­
ment relationship. Depending on the man­
ner in which the relevant employment 
contract is framed, this may also mean that 
the new employer must pay a length-of-
service payment for the years of service 
accrued with him, even though he has not 
61 — Case 19/83 Wendelboe [1985] ECR 457, paragraph 15. 
62 — Case 324/86 (cited in footnote 22, paragraph 9). 
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COLLINO AND CHIAPPERÒ 
himself made any such provision. In calcu­
lating this claim, the periods of service 
accrued with the transferor must also be 
taken into account. 
93. In this connection mention must be 
made of the fact that according to the 
Court's case law the terms of employment 
may be altered, even to the disadvantage of 
the employee, if this would have been 
possible for the transferor too, under 
national law irrespective of the transfer of 
the undertaking. The directive is intended 
to protect the employee in his legal rela­
tionship with the transferee only to the 
extent to which he was protected vis-a-vis 
the transferor under the rules of the Mem­
ber State. It follows that an alteration of the 
employee's rights by the new employer is 
permissible to the extent that such an 
alteration by the transferor would have 
been possible. 63 For if it was possible for 
the transferor to alter the employee's rights, 
this possibility cannot be excluded for the 
future solely because the undertaking has 
been transferred. The directive is merely 
seeking to prevent the transfer as such from 
being treated as a pretext to worsen the 
employee's existing position, by reducing or 
ceasing to grant entitlements already 
acquired. 64 The directive does not there­
fore prevent a temporal limitation or non­
uniform calculation of the length-of-service 
payment, if the new employer is allowed to 
alter the terms of employment in that 
regard irrespective of the transfer of the 
undertaking. 
94. It may be noted in passing that in the 
present case a length-of-service payment is 
provided for both by the old and the new 
employer, and in the main proceedings 
probably only the manner of its calculation 
is in dispute. Since the rights which existed 
with the transferor are transferred unal­
tered, the method of calculation which had 
been agreed with the transferor also passes 
to the transferee. Future calculations or 
adjustments which were merely in pro­
spect, without giving rise to any entitlement 
on the employee's part, are not transferred. 
The rights which matter are those which 
could be claimed from the transferor. 
Accordingly, there is no entitlement to 
comparability with new colleagues in the 
private sector (who may be better off), nor 
is there any entitlement to retrospective 
extension of more favourable arrangements 
made by the transferee to the years of 
service accrued with the transferor. 
95. It is for the national court to determine, 
using these yardsticks, whether the pay­
ment made to the plaintiffs met the condi­
tions set at ASST, or whether the defendant, 
as transferee, has altered to an extent not 
allowed at ASST the entitlement to a 
length-of-service payment, independently 
of the fact that the undertaking has been 
transferred. If the national court, on exam­
ining this question, concludes that an 
inadmissible reduction has been made in 
the plaintiffs' claim for severance pay, the 
payment will have to be recalculated for the 
63 — Case C-209/91 (cited in footnote 50, paragraph 27 et seq.). 
64 — Case 324/86 (cited in footnote 22, paragraph 17). 
OPINION OF MR ALBER — CASE C-343/98 
entire period of service on the basis of the 
method of calculation used at ASST. 
96. The answer to Question b1 should 
therefore be that an employee is entitled 
to payment of a single length-of-service 
payment which takes account of the entire 
period of employment (with the old and the 
new employer) if the contract of employ­
ment with the transferor made provision 
for such an entitlement and it has not been 
altered in an admissible manner by the 
transferee, independently of the transfer of 
the undertaking. 
IV — Question b1 
97. The second part of the question con­
cerns the system applicable to the period 
following the transfer of the undertaking 
for the purpose of determining regular 
increases in salary. 
Arguments of the parties 
98. The plaintiffs, the Finnish and Austrian 
Governments, and the Commission answer 
this question in the affirmative, in the light 
of the grounds adduced for Question b1. 
99. The defendant states that length of 
service is itself neither a right nor an 
advantage, but merely a factual circum­
stance which may have legal consequences. 
The defendant then refers to the collective 
agreement which governs the salary claims 
arising from length of service in this case 
for the former employees of ASST. 
Opinion 
100. As already explained in answer to 
question b1, the defendant is correct that a 
given length of service does not in itself 
constitute a right of the employee within 
the meaning of Article 3(1). Specific rights, 
such as an entitlement to a salary increase, 
must rather be associated with length of 
service, and this must already be the case 
under the employment relationship with 
the transferor. These rights are then trans­
ferred to the transferee. If these entitle­
ments vis-a-vis the transferor were already 
provided for by collective agreements, the 
transfer is governed by Article 3(2) of the 
directive, under which agreements with the 
transferor remain valid, although only until 
termination or expiry of the collective 
agreement. 
101. The question whether future salary 
increases are also covered in this sense will 
depend on whether they were agreed with 
the transferor in such a way as to give the 
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COLUNO AND CHIAPPERO 
employee a claim to these increases. This is 
for the national court to decide. In this 
regard it must again be pointed out that 
according to the Court's case-law a change 
in the terms of employment is possible if it 
could have been made by the transferor, 
irrespective of the transfer. 
102. The answer to Question b2 should 
therefore be that Article 3(1) of the direc­
tive is to be interpreted to mean that the 
length of service attained is transferred to 
the transferee only in connection with the 
rights as against the transferor associated 
therewith. 
E — Conclusion 
103. In the light of the foregoing considerations, I propose that the questions 
referred to the Court should be answered as follows: 
Regardless of the manner in which the directive is applied on the basis of the 
considerations set out above, it should be interpreted as follows: 
(a) A transfer for value, authorised by law promulgated by the State and 
implemented by ministerial decree, of an undertaking which is transferred 
from a public entity owned directly by the State to a private company 
I - 6689 
OPINION OF MR ALBER — CASE C-343/98 
belonging to another public entity which holds all its shares, where the 
activity transferred is assigned to the private company under an adminis­
trative concession, falls within the scope of Article 1 of Directive 77/187/ 
EEC. 
(b1) According to Article 3(1) of the directive, the continuation of the 
employment relationship with the transferee is mandatory, and employees 
are entitled to payment of a single length-of-service payment which takes 
account of the entire period of employment (with the new and the old 
owner), if the contract of employment with the transferor provided for 
such an entitlement. 
(b2) Article 3(1) is to be interpreted as meaning that the length of service 
attained is transferred to the transferee only in connection with the rights as 
against the transferor associated therewith. 
I - 6690