ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(75)429
Vol.1975/0165

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(75)429 final
Brussels ,25,July 1975
Amended Proposai for a
COUNCIL DIRECTIVE
omharmonization ofthelegislation ofMember
States onthesafeguarding ofemployees 'right
andadvantages inthe case ofmergers ,take­
overs andamalgamations
(Amendment presented bytheCommission tothe
Council pursuant toArticle 143 ,second
paragraph oftheEEC-Treaty )
COM(75 )429final

V/631/1/7^-E
EXPLANATORY MEMORANDUM
A.INTRODUCTION
1.Developments intheeconomy areproducing arapid increase in
concentrations between undertakings both atnational andCommunity
level .The extent ofthese developments isborne outbythefollowing
statistics :between 1962 and1970 ,theannual total ofamalgamations
inthesixoriginal Member States rose from 173to612 ,i.e. anin­
crease ofthree and ahalf times innine years .From 1966 to1970 alone
therate ofincrease doubled bycomparison with theperiod 1962 to
1966 .Insome Member States ,theincrease inthenumber ofamalgamation
hasreached thepoint where 50%oftotal industrial turnover isac­
counted forbyonehundred ofthelargest industrial undertakings .
2.This grouping process istheresult ofcompany mergers ,transfers
ofundertakings andofundertakings gaining control ofother underta -*
kings . - '•
3»These developments have made itnecessary tocreate appropriate
legal framework atCommunity level .Anumber oflegal instruments have
been drafted forthis purpose ,including theProposal for aThird
Directive onmergers between companies ,thepreliminary draft Conven­
tion oninternational mergers between companies ,theProposal for a
Council Regulation onthecontrol ofamalgamations ofcompanies and
theProposal foraStatute forEuropean companies .
Thepurpose ofthese legal instruments istoregulate thepro­
blems thrown upbythis grouping process inthefields ofcompany
and competition law .

dj . •** •1.»•
: .2- ' v/63W7^-E
h-.Itremains clear ,however ,that changes inthestructure ofunder­
takings caused bythis grouping process often have far-reaching effects
onthewelfare ofemployees intheundertakings affected .The laws of
theMember States ,totheextant that they regulate such operations ,
donotalways take sufficient account oftheinterests ofemployees .
This isparticularly true where such changes arecarried outinac­
cordance with civil lawrules governing transfers which give employees
nolegal rights vis-a-visthenew employer asregards maintenance of
theemployment relationship .
These problems and theneed toresolve them atCommunity level have
already been recognized .The legal instruments referred toabove thus
/
contain provisions safeguarding theinterests ofemployees more effec
tively when changes occur inthe structure ofundertaking .The fact should
notbeoverlooked ,however ^that $hese legal instruments ,inview of
their scope and theparticular nature oftheir social provisions ,re­
present only apartial solution tptheproblems which employees face when
changes inthe structure ofundertakings occur .
6.InitsResolution of21January 197^concerning asocial action
programme ,theCouncil voiced thepolitical will toadopt themeasures
necessary tobring about animprovement inliving andworking conditions
and toharmonize them astheprogramme progressed ,including thepro­
tection ofemployees' interests ,particularly asregards theretention
oftheir rights andadvantages inthecase .ofamalgamations ,business
concentrations and rationalization operations .
Itshould benoted inthis connection that thegovernment experts
from thesixoriginal Member States responsible fordrawing upaPreli­
minary draft Convention oninternational mergers between companies drew
attention in1972 inajoint declaration onbehalf oftheir governments
totheneed toprotect employees bymeans ofaspecial comprehensive
legal instrument when anykind ofbusiness concentration occurred .

-3- V/63l/1/7^-E
7«That istheobject ofthis proposed Directive ,which theCom­
mission has undertaken tosubmit tothe Council#
The aimoftheproposed Directive istoprotect employees from
losing acquired and future rights inthe event oftransfers ofunder­
takings oramalgamations byintroducing provisions affording protection
and safeguards#
This aim istobeachieved bythe following means :
transfer ofthe employment relationship from the transferor tothe
transferee intheevent ofachange ofownership ;
-protection ofemployees against dismissal onthe sole ground of
transfer ofanundertaking oranamalgamation ;
provision ofinformation ,consultation andnegotiations with em­
ployee representatives regarding theinterests ofthe employees
affected .
8,Theproposed Directive seeks ,inaccordance with Article 117
oftheEECTreaty ,topromote improved working conditions andanim­
proved standard ofliving forworkers soastomake possible their
harmonization while theimprovement isbeing maintained through ap­
proximation ofprovisions laid down bythelaw ,regulation oradmi­
nistrative action ofthe Member States .

-if- V/b3Vï /7k-&
B,COMMENTARY ONTHE INDIVIDUAL PROVISIONS
Article 1
This Article lays down thescope oftheproposed Directive#
Itcovers thetransfer ofundertakings orparts ofundertakings
toanother owner through mergers between orconversion ofcompanies ,
and other legal transfers .
Theproposed Directive does not atthis point introduce itsown
conceptual definitions ,leaving this task tothelaws ,regulations and
administrative provisions oftheMember States and future Community law .
Bythelatter ismeant theProposal for aThird Directive onmergers
between companies and thepreliminary draft Convention oninternational
mergers between companies .
All legal transfers are covered ,i.e. notonly transfers of
property butletting ,leasing and thegranting ofbeneficial interests .
Inaddition ,not only aretransfers ofwhole undertakings covered ,but
also cases where individual establishments are transferred from one
undertaking toanother .
With regard totheconcept ofacompany ,theproposed Directive
refers tothesecond paragraph ofArticle 58oftheEECTreaty and
thus covers all companies orfirms governed bycivil orcommercial
law ,including cooperative societies ,andother legal persons governed by
public orprivate law ,except forthose not operating forgain .
Although all forms oflegal transfer ofundertaking 3are charac­
terized byachange ofownership and thus ofemployer concentrations
between undertakings generally take place insuch away that theun­
dertakings remain autonomous legal entities and theidentity ofthe

/· "-Ί·, - '*
·' .V* !
-5- . V/631/1/7^-E
employer remains the same .All that happens isthat oneundertaking
gains control ofothers .
Although with such amalgamations theidentity oftheowner or
employer remains thesame thecontrolling undertaking can ,byvirtue
ofitsrights ofcontrol exert considerable influence onthe form of
theemployment relationships inthedependent .undertaking ,with pos­
sible adverse effects onemployees' working conditions .Employees are
thus inneed ofprotection similar tothat needed inthecase oftrans­
fers ofundertakings .Since ,however ,thelegal identity oftheemployer
remains unchanged alllegal consequences stemming from ,achange ofem­
ployer areruled out .Paragraph 2thus provides £hat only those provi­
sions oftheproposed Directive which secure claims under company .
pension schemes (Article 5),which deal with theprotection ofemployees .
against unjustified dismissal "andwhere there isafundamental change
intheir working conditions (Article 6),which govern transfers of
employees (Article 7)andwhich provide 'aprocedure forconsulting
employees (Article 9)aretoapply byanalogy .
With regard totheconcept ofcontrol ,theproposed Directive
does notgive itsowndefinition ,andrefers toArticle 2ofthePro­
posal foraCouncil Regulation onthecontrol ofamalgamations of
companies . ^
(With regard totheterritorial scope oftheproposed Directive ,
itappears necessary toprotect therights ofemployees notonly in
cases where thetransfer oramalgamation involves establishments or
undertakings situated within theterritory ofaMember State orof
several Member States ,butalso toinclude transactions involving
establishments orundertakings situated intheterritory ofoneor
several Member States andintheterritory ofoneorseveral non-
member states . -

-6- У/631/1/7^-Е
Since forlegal reasons itisimpossible tothrust this proposed Com­
munity legislation onnon-member states ,paragraph 3provides that
theDirective shall apply inthelatter case only insofar asestablish­
ments orundertakings situated within theterritory oftheSEC are
affected byit.
Article 2
Thedefinition oftheconcepts of"transferor "and "transferee "
inparagraph 1isoflegal significance inrelation tochanges of
ownership ,and isintended tosimplify thelanguage used inthepro­
posed Directive .
Paragraph 2makes itclear that "employee representatives "means
employee representatives asdesignated bythelawoftheMember States .
Theproposed Directive thus does notinterfere with themachinery and
structural arrangements ofemployee representation atnational level .
Article 3
This Article which provides forautomatic transfer ofthe em­
ployment relationship tothetransferee ,isthecore oftheproposed
Directive .Itisdesigned toprevent thetransferee from refusing to
retain employees byvirtue ofcivil lawprovisions governing transfers ,
and from even agreeing with thetransferor that transfer ofemployment
relationships shall beexcluded .Thetransferor would insuch acase
have noalternative buttodismiss employees excluded from thetransfer
which would becontrary tothe objective ofprotecting employees .
According toprevailing legal opinion under allnational sys­
tems oflawcommercial practice forms part ofanemployment relationship
totheextent that itgives rise torights andobligations onthepart
ofthe contracting parties .

-7- V/631/1/7^E
The -fact that these rights and obligations are also transferred is .
made clear inparagraph 1. . .
Transfer tothetransferee ofrights andobligations arising
out ofcollective agreements calls fordifferent arrangements tomeet
thevarying cases .Where thetransferor hasbeen party toacollective
agreement itappears logical that thetransferee should automatically
assume thetransferor 'srights andobligations arising outofsuch an
agreement ,asstipulated inparagraph 2,until theparties have conv
eluded afresh collective agreement oragreements .
Thelegal position isdifferent inthecase ofcollective agree­
ments concluded between trade associations towhich thetransferor ^but
not :thetransferee ,isparty ajidwhich have notbeen declared generally
binding .Itwould inthis case becontrary totheprinciple offreedom
ofassociation asprotected under theconstitutional lawoftheMember
States tomake thetransferee party toacollective agreement against
hiswill .Inorder ,however ,toprevent employee from losing collectively
agreed teres ofemployment should thetransferee beunwilling tobecome
party tothecollective agreement jasolution hasbeen sought inpara­
graph 3which does notimpose thecollective agreement upon thetrans­
feree butrequires himtocontinue torespect terms ofemployment al–
ready secured under acollective agreement until theparties have conclu
dedafresh collective agreement oragresments ,although foraperiod
notexceeding oneyear .Where theparties fail toconclude afresh agree
ment within this period andthetransferee isbound byanother col­
lective agreement ,thelatter applies .
Theprovisions inparagraphs 2and3oncontinuation ofthe
validity ofcollective agreements correspond toalarge extent tothe
views expressed bytheEconomic andSocial Committee onthis point .

-8 -\
V/63l/l/7^-E
Article k
This Article provides that anemployee 'slength ofservice with
thetransferor isoneofthe factors protected under theemployment
relationship .Inthis way ,theemployee isguaranteed continuity of
theperiod ofemployment ,irrespective ofwhether ornotprovisions
laid down bylaw ,orcontained incollective agreements oranindivi­
dual contract ofemployment applicable totheemployment relationship
which isthesubject ofthetransfer call forparticular legal conse­
quences according tothelength ofservice intheestablishment or
undertaking . ' ,
Article5
Employees' 'acquired and future rights arising outofcompany
orinter-company welfare schemes ,whether forpensions orrelief in
theevent ofsickness orother circumstances srepresent foremployees
animportant part oftheemployment relationship .However ,itisclear
that therequirements ,forms andnature ofsuch obligations differ so
greatly and theways inwhich they areorganized are sovaried ,that
itisnotpossible tolaydown specific Community rules inthis pro­
posed Directive .Nor are these necessary toattainment oftheobjec­
tives oftheDirective .For this reason ,theproposed Directive con­
fines itself torequiring Member States £0ensure that employees do
not lose rights ,andleaves tothem thechoice ofways andmeans .
Article 6
Protection oftheemployment relationship which isthepurpose
ofthis proposed Directive could becircumvented ifthetransferor or
transferee were todismiss employees byreason ofthetransfer .This
isalready prohibited bylawinsome Member States .

•9-:' v/esi/i/^-E
Inothers ,however ,employers arefree todismiss employees insuch
circumstances .The uniform provision had therefore tobeincluded
that dismissals ontheoccasion ofatransfer ofanundertaking are
permitted only forpressing business reasons .
Economie common sense dictated the latter qualification .
Itisintended toenable anentrepreneur tocarry cutorganizational
changes ,adaptation ofproduction ,rationalization measures etc.onthe
occasion ofthetransfer ofanundertaking .This canbeofimportance ,
forexample ,where atransfer iscarried out torestore health to
economically weak undertakings .Insuch circumstances ,theemployees inthe
undertakings concerned may beaffected both quantitatively and qualita­
tively auddismissals may even prove unavoidable .
Theproposed Directive deliberately refrains from giving a
list ofbusiness reasons .These oanvary sogreatly according tothe
circumstances ofeach case that todraw upsuch alist appears im­
possible ,andanyattempt todosointhis Directive would only be
confusing .Itisthus left totheindividual Member States todefine
theconcept of"pressing business reasons ",either through legislation
orbyleaving ittobedetermined inthecourts orincollective agree -
%
ments .
Itaccords ,however ,with theobjectives oftheproposed Di­
,rective that reliance onpressing business reasons tocarry outdis­
missals ispossible only ifallpossible solutions within theunder­
taking ;such astransfers toanother acceptable job ,measure forre­
adjustment andretraining have first been exhausted .Itisevident that
theprocedure forinforming andconsulting employee representatives
provided inArticle 9oftheproposed Directive serves asanagpfopria -
teframework forthose concerned toreach agreement onhow theproblems
arising inthis context are toberesolved .

-10- У/б31/1/7^-Е
Moreover ,inthe event ofcollective redundancies ,theCoun­
cilDirective (1)of17February 1975 ontheapproximation ofthelaws
oftheMember States relating tocollective redundancies applies ,which
provides forconsultation ofemployee representatives ,aduty prior
notification ofcollective redundancies ,andintervention bypublic
authorities i
Where anemployee nolonger wishes tocontinue theemployment
relationship with the transferee because the transfer oftheunder­
taking hasresulted inafundamental anddetrimental change inhis
working conditions ,itwould appear justified ,asparagraph 2provi­
des ,totreat the employee asthough termination ofhisemployment
has been due totheaction ofthe employer .
The proposed Directive does not stipulate any legal conse­
quences based onCommunity law that should follow dismissals ofthe
kind referred toinparagraphs 1and 2,butprovides inparagraph 3that
thelegal consequences ofsuch dismissals should begoverned bythe
laws ofthe Member States .
Article 7
This provision governs cases where employees aretransferred
toother establishments asaresult ofthetransfer oftheundertaking ,
bymaking provisions ofArticle 6applicable byanalogy .This means
that transfers ofemployees arepossible only forpressing business
reasons andthat anemployee mayterminate theemployment relation­
ship asprovided inArticle 6(2)where such transfer would result
inafundamental anddetrimental change inhisworking conditions .
These provisions cannot apply ofcourse where theemployee
isbound under hiscontract ofemployment toaccept atransfer ,but
only insofar asthis could reasonably beexpected inthecircumstances
prevailing when thecontract ofemployment wasconcluded ,even following
transfer oftheundertaking .
(1)OJNoLko.22February 1975

JW*JP
-11- V/631/1/74-E
Article 8
This provision guarantees that thelegal status andfunction of
employee representatives (asdefined inArticle 2(2 )arenotaffected
bytransfers ofundertakings .Where anundertaking istransferred as
acomplete entity ,employee representatives inoffice atthat time
continue toexercise their functions even after completion ofthe
transfer .This isnot ,however ,feasible where only apart ofanun­
dertaking isdetached from oneundertaking andincorporated into ano­
ther undertaking ,theemployee representatives inthenewundertaking
becoming responsible foritatthat point .
Provisions insome Member States stipulate that new elections
ofemployee representatives must beheld intheevent ofchanges in
the composition ofthework force# Such circumstances can arise ,for
example ,where asingle overall works council has tobeformed forthe
new company when companies merge ,each ofwhom previously hadsuch a
works council .Paragraph 2takes account ofthis special legal situation .
Article 9
The substantive provisions ontheprotection ofemployees' ac­
quired rights need tobesupplemented byprocedural provisions which
ensure that employee representatives areinformed ofandconsulted
upon theconsequences ofthetransfer ofanundertaking .Such provisions
arecontained intheProposal foraThird Directive onmergers bet­
ween companies inrespect ofmergers between limited companies within
the same Member State .
Inorder toprevent overlapping between thetwodirectives ,
paragraph 5excludes application ofthis provision tomergers between
companies towhich theThird Directive applies .

-12- V/631/1/7^-E
Secondly ,morder toavoid xnpractice Jrhe application ofamultitude
ofdifferently structured andoriented procedural provisions ,emphasis
hasbeen placed onthe form ofthese provisions being largely identical
inboth proposed Directives asfarasthis waspossible having regard
tothe special features ofthetransactions toberegulated .
The first aim istorequire both transferor and transferee to
inform their respective employee representatives indetail ofthe
reasons forthe transfer oftheundertaking ,iteffects onemployees
andmeasures concerning them ,and ifnecesssary todiscuss these with
the employee representatives .Such information must inprinciple be
provided inthe form ofawritten report twomonths before completion
ofthe transfer oftheundertaking .Torender this provision more
flexible and toenable ittobeapplied toalltransactions covered by'
theproposed Directive ,provision wasmade that ,bywayofexception ,
both the twomonth period and therequirement ofwriting may bedis­
pensed with .Inevery case ,however ,information must begiven in
due time ,"due time "being determined according tothecircumstances
ofeach individual case .Provision should also bemade for cases in
which the employees 1representatives consider that theproposed trans­
action will bedetrimental totheinterests ofemployees .Employee
representatives should insuch oases have theright tocall fornego­
tiations with aview toreaching agreement onmeasures tobeadopted
forthebenefit ofemployees .Lastly ,provision must bemade forcir­
cumstances inwhich thenegotiations requested byemployee represen­
tatives fail toproduce agreement .Each party should inthis case have
theright torefer thematter toarbitration .Thearbitration board
gives abinding decision onthemeasures tobeadopted forthebenefit
ofemployees .
Rules governing thesetting upofarbitration boards cannot -beleft en­
tirely tothenational legislatures .Itmust atleast beguaranteed
that theboard iscomposed ofpersons whoarereally conversant with
theproblems tobesolved .Half themembers must accordingly beappoin­
tedbytheemployer anclhalf bytheemployee representatives .The
chairman isappointed bymutual consent oftheparties .

-13 V/631/1/7't-E
The competent court intervenes only where agreement cannot bereached
onthis point 4
Paragraph provides that theobligation tonegotiate pursuant
toParagraph 1and thenegotiation afcdoarbitration procedure pursuant
toParagraph 3canneither prevent norpostpone completion ofthepro­
posed transfer .
Articles 10to13
These Articles contain thenecessary implementing provisions .

V/63v1 /?^-E
Anended Proposai for a
COUNCIL DIRECTIVE'
onharmonization ofthe legislatxon of
Member States onthesafeguarding of
employees 'rights and advantages inthe
case ofmergers ,takeovers andamalgama­
tions
THECOUNCIL OFTHEEUROPEAN COMMUNITIES ,
Having regard totheTreaty establishing theEuropean Economic Com­
munity ,andinparticular Article 100thereof ;
Having regard totheProposal from theCommission ;
Aftsrconsulting theEuropean Parliament }
After consulting theEconomic andSocial Committee 5
Whereas theestablishment ofasingle market forallproducts andthe
free movement ofpersons andmeans ofproduction intheCommunity has
notonly resulted inanenlarged market forEuropean undertakings and
keener competition inthemarkerts oftheMember States ,but the eco­
nomic union thus created hascompelled undertakings toalter their
structures ,methods and size ,inparticular through mergers andamal­
gamations ,inorder toadjust tothenewdemands oftheoommon market .

whereas under Article 2oftheTreaty theCommunity hasasitstask ,
byestablishing acommon market andprogressively approximating the
economic policies ofMember States ,topromote throughout theCommu­
nity aharmonious development ofeconomic activities ;whereas under
thesame Article itstask is,further ,topromote anaccelerated raisin
ofthestandard ofliving ,whereas moreover ,theMember States agreed
inArticle 117upon theneed topromote improved working conditions
and animproved standard ofliving forworkers ,soastomake possible
their harmonization while theimprovement isbeing maintained ,inpar­
ticular through approximation ofprovisions laid down bylaw ,regula­
tion oradministrative action intheMember States 4
Whereas theCouncil notonlyreaffi£n>es this objective initsResolution
of21January 197^concerning asocial action programme (1)butalso 1
voiced thepolitical will toadopt themeasures necessary toachieve
it.
Whereas changes inthestructure ofundertakings donotalways assist
theattainment ofthese objectives ,butonthecontrary tend toad­
versely affect employees 1living andworking conditions ,inparticular
with regard tosafeguarding their rights andadvantages ;whereas the
same problems arise irrespective ofthewayinwhich thestructure of
theundertaking isaltered *• . ..
Whereas action musttherefore betaken atCommunity level toprotect
employees intheevent ofchanges inthestructure ofundertakings so
astoensure asfaraspossible security ofemployment ,themaintenance
ofworking conditions ,thepreservation ofright <5secured under indi­
vidual contracts ofemployment orcollective agreements ,and'thereten­
tion ofgenerally recognized practices andspecial arrangements infor­
ceinundertakings .
Wheraas employees must likettfise beprotected intheterritory ofthe
Community where aperson orundertaking situated intheterritory ofa
third country isinvolved inthetransaction .
(1)OJNoC13,12February 197^

-3- V/631/1/7^-E
whereas itxsmoreover essential that employees oftheundertakings
inquestion are informed ofand consulted upon the consequences of
thetransaction insofar asthey areaffected .,and that provision is
made for anappropriate negotiating procedure •
Whereas such action canonly betaken onthebasis oftheprogressive
harmonization ofprovisions laid down bylaw ,regulation oradminis­
trative action intheMember States fortheproteotion ofemployees in
the event ofchanges inthestructure ofundertakings ,
HAS ADOPTED THIS DIRECTIVE :
PAPT I
SCOPE AND DEFINITIONS
Article 1
1)This Directive shall apply tothetransfer ofundertaking orparts
ofundertakings tosmother owner through mergers between orconversion
ofcompanies within themeaning ofthesecond paragraph ofArticle 58
oftheTreaty establishing theEuropean Economic Community ,orbyway
ofother legal transfers .
2)Artciles 5,6,7and9ofthis Directive shall apply byanalogy to
concentrations between undertakings within themeaning ofArticle 2
ofCouncil Regulation No of••••••• ,where such aconcen -
4.
tration has the same effect upon dependent orcontrolling undertaking
aswould atransfer within themeaning ofparp^raph 1.

y
-i»-■ V/631/1/7^E
3)This Directive shall apply where andinsofar asthetransferring
ordependent undertaking issituated inthe territory oftheMember
States oftheEuropean Economic Community orthetransfer orconcen­
tration affects anundertaking within that territory involved insuch
atransaction .
Article 2
1)For thepurposes ofthis Directive transferor ortransferee means
anynatural orlegal person that relinquishes oracquires aninterest
inanundertaking byreason ofatransfer ofthekind specified in
Article 1.
2)Forthepurposes ofthis Directive employee representatives means
employee representatives asdesignated bylaworpractice intheMem­
ber States -
PART II
TRANSFER OFEMPLOYMENT RELATIONSHIP
Article 5
1)Thetransferor 'srights andobligations arising outoftheemployment
relationship entered into byhimshallj upon theoccasion ofatransfer
within themeaning ofArticle 1,beatomatically transferred tothe
transferee andshall include rights andobligations arising outof
commercial practice .
/ ^
2)Thetransferor 'srights andobligations arising outofcollective
agreements entered into byhimshall ,upon theoccasion ofatransfer
within themeaning ofArticle 1,beautomatically transferred \tothe
transferee andshall continue toexist until theparties have concluded
afresh collective agreement oragreements .

-5- V/631/7/7*f-E
3)Conditions ofemployment agreed under atrade association collective
agreement towhich thetransferor has been party shall continue tsbe
valid following atransfer within themeaning ofArticle 1even where
the transferee isnot bound bythe same trade association collective
agreement asthetransferor ,until theparties have concluded afresh
collective agreement oragreements but for amaximum ofoneyear following
thetransfer# Where nofresh collective agreement isconcluded within
this period and the transferee isparty toatrade association collective
agreement ,the terms ofthat agreement shall apply#
b)Thelegal consequences ofparagraphs 1to3cannot beexcluded or
restricted bydeclarations onthepart ofthetransferor ortransferee .
Article h
Anemployee 'slength ofservice with anundertaking based onhis em­
ployment relationship with thetransferor shall forallrelevant pur­
poses betaken fully into account inhis relationship with thetrans­
feree .
PART III
CLAIMS ARISING OUT OFCOMPANY AND INTER-COMPANY
PENSION SCHEMES
Article 5
1)TheMember States shall adopt measures necessary toensure that
employees 'acquired rights and future rights topayments from company or
inter-company pension schemes are not diminished astheresult ofa
transfer within themeaning ofArticle 1.
2)TheMember States shall adopt thesame measures inrespect ofem­
ployees soentitled butnolonger employed bytheundertaking atthe
time ofatransfer within themeaning ofArticle 1»

V/63V1 /7^-E
PART IV
DISMISSALS AND TRANSFERS
Article 6
1)Atransferor ortransferee maydismiss employees ontheoccasion
ofatransfer within themeaning ofArticle 1only forpressing business
reasons .
2)Where anemployee severs anemployment relationship because atrans­
ferwithin themeaning ofArticle 1hasresulted inafundamental and
detrimental change inhisworking conditions ,theemployer shall be
regarded ashaving been responsible fortermination oftheemployment
relationship .
3)Thelegal requirements andconsequences ofdismissals prohibited
under theterms ofparagraph 1,andofseverance ofemployment relation­
ships inthecircumstances referred toinparagraph 2,shall begoverned
bythelaws ,regulations andadministrative provisions oftheMember
States .Thesame shall apply inrespect ofseverance payments andcom­
pensation payable intheevent oftermination ofanemployment relation­
ship .
Article 7
Article 6shall apply byanalogy totransfers ofemployees from one
establishment toanother ontheoccasion ofatransfer within the
meaning ofArticle 1.Itshall ,however ,notapply where anemployee is
bound byhiscontract ofemployment toaccept transfer toanother es­
tablishment andwhere such acceptance could reasonably beexpected in
thecircumstances prevailing when thecontract wasconcluded .

V/631/1/7i+-E
PAPT V :
EMPLOYEE .REPRESENTATION AND
CONSULTATION
Article 8
1)Thelegal statue ,andfunction ofemployee representatives inun­
dertakings transferred within themeaning ofArticle 1shall remain
unaffected bysuch transfer .This shall not apply inthe case oftrans­
fers ofparts ofundertakings .
2)Thefirst sentence ofparagraph 1shall notapply where ,theconditions
fornewelections aremetunder thelaws ,regulations cradministrative
provisions oraccording tocurrent practice intheMember States#
Article 9
1)Thetransferor andtransferee shall berequired toinform their
employee representatives ofthereasons for .transfers within themeaning
ofArticle 1,ofthelegal ,economic andsocial consequences foremployee
andofallintended measures affecting employees .Itisrequested bythe
employee representatives that theaction tobetaken should benegotia­
tedbytheparties .
2)Such information shall ingeneral begiven notless than 2months
before completion ofatransfer within themeaning ofArticle 1inthe
form ofadetailed report .Inspecial circumstances andbyway ofex­
ception ,information given orally andinduetime prior tocompletion
ofatransfer within themeaning ofArticle 1shall suffice .
3)Where theemployee representatives consider that theinterests of
employees areadversely affected byatransfer within themeaning of
Article 1,thetransferor andtransferee shall ,attherequest oftheir
employee representatives ,negotiate with them with aview toreaching
agreement onmeasures tobeadopted forthebenefit ofsuch employees .

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If,oncompletion ofsuch negotiations orwithin 2months oftheir
commencement ,theparties fail toreach agreement each ofthem shall
beentitled torefer the matter toanarbitration board ,which shall
■ •» •
give abinding decision onsuch measures within onemonth .Thearbitra­
tion board shall becomposed ofarbitrators *equal numbers ofwhom
shall beappointed byeach party ,andachairman appointed bymutual
consent oftheparties *Where one /party fails toappoint arbitrators
orwhere noagreement isreached ontheappointment ofthechairman
appointment shall bemade bythecourt .
k)Transfers ofundertakings shall notbeaffected bythenecessity ;
ofhaving anegotiation provided forinparagraph 1andbythenego­
tiation andarbitration procedure provided forinparagraph 3*
5)This Article shall notapply tomergers between companies within
themeaning of.theThird Council Directive -(EEC)No of ; •
, . PART VI .
~ ''FINAL PROVISIONS v'' / '
Article 10 •
This Directive shall notrestrict theright ofMember States toapply
ortoadopt laws ,regulations oradministrative provisions more fa­
vourable toemployees . • r -

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Article 11
1)Member States shall adopt thelaws ,regulations ansadministrative
provisions necessary tocomply with this Directive within twelve months
ofits publication ,and shall forthwith inform theCommission thereof .
2)Member States shall communicate totheCommission thetexts oflaws ,
regulations oradministrative provisions which they adopt inthe field
covered bythis Directive .
Article 12
Member States shall within twelve months ofthe expiry ofthe twelve
month period specified inArticle 11,forward totheCommission all
relevant information toenable theCommission todraw upareport for
theCouncil ontheapplication ofthis Directive .
_Article 13
This Directive xsaddressed tothe Member States