Judgment — ECLI:EU:C:1999:594
Date: 1999-12-02
Language of the case: English
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: United Kingdom

Summary of the Judgment 
1. Social policy — Approximation of laws — Transfers of undertakings — Safeguarding 
of employees' rights— Directive 77/187— Applicability to a transfer between 
companies in the same group 
(Council Directive 77/187) 
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SUMMARY — CASE C-234/98 
2. Social policy — Approximation of laws — Transfers of undertakings — Safeguarding 
of employees' rights — Directive 77/187 — Scope — Company belonging to a group 
which subcontracts works contracts to another company in the same group — 
Included — Conditions 
(Council Directive 77/187) 
1. Directive 77/187 on the approximation 
of the laws of the Member States 
relating to the safeguarding of employ­
ees' rights in the event of transfers of 
undertakings, businesses or parts of 
businesses can apply to a transfer 
between two companies in the same 
group. 
In contrast to competition law, nothing 
justifies a parent company's and its 
subsidiaries' uniform conduct on the 
market having greater importance in 
the application of the Directive than 
the formal separation between those 
companies which have distinct legal 
personalities. That outcome, which 
would exclude transfers between com­
panies in the same group from the 
scope of the Directive, would be pre­
cisely contrary to the Directive's aim, 
which is to ensure, so far as possible, 
that the rights of employees are safe­
guarded in the event of a change of 
employer by allowing them to remain 
in employment with the new employer 
on the terms and conditions agreed 
with the transferor. 
2. Directive 77/187 on the approximation 
of the laws of the Member States 
relating to the safeguarding of employ­
ees' rights in the event of transfers of 
undertakings, businesses or parts of 
businesses applies to a situation in 
which a company belonging to a group 
decides to subcontract works contracts 
to another company in the same group 
in so far as the transaction involves the 
transfer of an economic entity between 
the two companies. The term 'eco­
nomic entity' refers to an organised 
grouping of persons and assets facil­
itating the exercise of an economic 
activity which pursues a specific objec­
tive. 
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