7.11.75 Official  Journal  of the European  Communities No C 255/25 
The Committee  emphasizes  the  importance  of the 
Community  role  in this  fight  against  poverty  and 
accepts  the Commission's  view  that  'the  proposal  to 
promote  pilot  projects  demonstrates  that  the 
Community  intends  to play  a role  which,  although 
limited  in the  resources  involved,  is potentially  of 
great  significance'.  Through  this  programme,  and 
with  adequate  arrangements  to ensure  follow-up 
action,  the  Community  can  begin  to demonstrate  a 
genuinely  human  face. The Council  now  has  the responsibility  of approving 
and ensuring  the  early  implementation  of  the 
programme  of pilot  schemes.  The  Section  is of the 
opinion  that  approval  should  be forthcoming  without 
delay,  so as to permit  an early  start  to work  on the 
ground.  This  approval  should  be  given  in an 
appropriate  legal  form  so as to ensure  a sound  basis 
for the  long-term  development  and  Community 
support  of a small,  but  potentially  most  important, 
advance  towards  a comprehensive  social  policy  of 
benefit  to all the people  of the Member  States. 
Done  at Brussels,  24 April  1975 
The Chairman 
of the Economic  and  Social  Committee 
Henri  CANONGE 
Opinion  on the proposal  for a Council  Directive  on harmonization  of the legislation  of 
Member  States  on the retention  of the rights  and  advantages  of employees  in the case  of 
mergers,  takeovers  and  amalgamations 
The text  referred  to the Committee  was  published  in Official  Journal  of the European 
Communities  No  C 104  of 13 September  1974,  page  1. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 14 June  1974,  the Council  referred  the abovementioned  proposal  to the Economic 
and Social  Committee  under  Article  100  of the  Treaty  establishing  the  European 
Economic  Community. 
B. OPINION  OF THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  drew  up its Opinion  at its 129th  plenary  session, 
held in Brussels  on 23 and  24 April  1975. 
The Opinion  is published  below: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the referral  on 14 June  1974  by the 
Council  of the  European  Communities  of the 
proposal  for a Council  Directive  on harmonization  of 
the legislation  of the Member  States  on the retention of the rights  and  advantages  of employees  in the case 
of mergers,  takeovers  and  amalgamations; 
Having  regard  to  the  Treaty  establishing  the 
European  Economic  Community  and  in particular 
Article  100  thereof; 
No C 255/26 Official  Journal  of the European  Communities 7.11.  75 
Having  regard  to the decision  taken  by its Bureau  on 
25 June  1974  instructing  the  Section  for  Social 
Questions  to draw  up an Opinion  on the matter; 
Having  regard  to the Opinion  adopted  by the Section 
for Social  Questions  at its meeting  on 12 and  13 
March  1975,  and  the report  submitted  by Mr Muhr, 
the Rapporteur; 
Having  regard  to the discussions  at its meeting  on 23 
and 24 April  1975  (129th  plenary  session  of 23 and 
24 April  1975); 
Whereas  mergers,  takeovers  and  amalgamations  may 
often  entail  manpower  reviews  in the course  of which 
rights  which  have  accrued  to workers  in the past  may 
be lost  or abridged,  if the worker's  rights  are not  , 
ensured  proper  minimum  protection  under  the law; 
Whereas  while  it may  be desirable  to establish  certain 
controls  in respect  of mergers,  takeovers  and 
amalgamations,  in the general  public  interest  and  in 
order  to ensure  the protection  of individuals,  there  is 
no case  for blanket  prohibition  of such  operations, 
which  may  serve  technological  progress,  the 
maintenance  of jobs  that  might  otherwise  be lost,  and 
that accelerated  raising  of living  standards  which  is 
one of the objectives  of the Treaty  of Rome; 
Whereas  important  civil  liability  questions  may  arise 
in connection  with  mergers  and  takeovers,  and 
whereas  these  questions,  not dealt  with  in the present 
proposal  for a directive,  must  not be neglected; 
Whereas  it is feasible  to treat  the  proper  social 
protection  of the  workers  under  the  law  and  the 
implementation  of merger,  takeover  or amalgamation 
operations  separately,  so  that  the  procedures 
provided  for in this  Directive  need  not  delay  such 
operations, 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 62 votes  to 27 and with  14 abstentions: 
The Committee  approves  the proposal  for a Directive 
subject  to the following  comments: 1. General  comments 
1.1. The  Committee  endorses  wholeheartedly  the 
objective  of the  present  proposal  for  a Directive, 
which  is to introduce  mandatory  provisions  to 
protect  employees  again&t  loss of rights  or claims  as a 
result  of mergers,  takeovers  f or amalgamations. 
Adequate  minimum  protection  of employees  is today 
an even  more  important  objective  than  in the past 
because  industrial  development  at both  national  and 
Community  level  is now  entailing  an even  larger 
number  of changes  in corporate  structures,  which  are 
also on a larger  scale  than  in the past:  the effects  on 
the social  situation  of the  labour  force  of these 
changes  are often  far-reaching. 
1.2. The  Committee  reaffirms  the observation  it 
has already  made  on several  occasions,  viz.  that  a 
merger,  takeover  or amalgamation  is the right  course 
in some  circumstances,  subject  to certain  criteria  laid 
down  in the interests  of the  Community  economy 
and in the interests  of employees.  Such  operations 
ought  therefore  not to be hampered  by unnecessary 
or unduly  burdensome  obstacles.  But the Committee 
believes  that  many  harmful  consequences  for  the 
workers  could  be forestalled  if the implications  of 
reorganization  operations  for  the  workers  were 
considered  carefully  well  before  the operations  were 
actually  carried  out.  For  it can  happen  that  while 
such operations  may  be very  beneficial  for  the 
profitability  of the companies,  the adverse  effects  are 
borne  by  the  workers  alone.  The  Committee 
accordingly  attaches  special  importance  to this 
Commission  proposal,  as it does  to all Community 
proposals  designed  to prevent  or compensate  for 
damage  inflicted  on workers.  The  present  proposal 
aims  to ensure  that  workers  alone  do not  bear  the 
cost of achieving  technological  progress  or alone 
make  the sacrifices  that  may  be necessary  in the short 
run to achieve  improved  living  standards  in the 
longer  run. 
1.3. This  said,  the Committee  wishes  also  to stress 
that the  operations  referred  to in the  present 
Directive  can make  an important  contribution  to the 
maintenance  of employment,  particularly  when  one 
of the  firms  concerned  in the  operation  would 
otherwise  riot  be able  to stay  in business.  In this 
connection,  it notes  with  satisfaction  that  the new 
Directive  is not in any  sense  intended  to constitute  a 
legal  obstacle  to the desire  of management  to seek 
improved  corporate  structures  and  enhanced 
profitability. 
7.11.  75 Official  Journal  of the European  Communities No C 255/27 
1.4. The  Committee  starts  from  the premise  that 
jobs and  acquired  rights  can  be safeguarded  and 
existing  terms  of employment  maintained  by having 
either  mandatory  provisions  of law  which  guarantee 
individual  legal  protection,  or a collective  system  of 
safeguards  centred  on negotiations  with  workers' 
representatives.  The  Committee  notes  that  the 
proposed  directive  is based  on a combination  of the 
two methods.  When  there  is a change  of employer,  a 
system  of mandatory  legal  provisions  is to guarantee 
the automatic  transfer  of  the  employment 
relationship  from  the transferor  to the transferee  and 
the protection  of employees  against  dismissal  due 
exclusively  to  a change  in the  structure  of 
undertakings,  thereby  precluding  adverse  effects  as 
far as possible  form  the outset.  And,  in addition, 
there  are  to  be  procedures  for  information, 
consultation  and  negotiations  with  employees' 
representatives  to find  ways  of offsetting  in particular 
those  negative  effects  which  are not  dealt  with  or 
satisfactorily  mitigated  by the system  of individual 
legal  protection. 
1.5. The  Commission's  proposal  does  not cover  all 
questions  of civil  liability  towards  employees  arising 
in connection  with  changes  of employer.  The  case  for 
dealing  with  this  issue  under  a different  legal 
instrument  from  that  at present  referred  to it has 
been  considered  by the Committee.  Civil  liability  ques-
tions  are,  of course,  extremely  complex  problems  in-
volving  aspects  of the law lying  essentially  outside  the 
field  of labour  law,  and  they  are particularly  difficult 
to settle  at Community  level  because  of the differing 
legal  situations  in the  various  Member  States. 
Another  difficulty  arising  in connection  with  civil  lia-
bility  is that  unduly  strict  rules  could  in certain  cir-
cumstances  hamper  negotiations  for takeovers. 1.8. Noting  that  a large  number  of insolvencies 
and bankruptcies  occur  outside  the  context  of 
mergers,  and  a large  number  of mergers  and 
takeovers  occur  without  there  being  any danger  of an 
insolvency  or bankruptcy,  the Committee  considered 
whether  it would  be  desirable  to settle  these 
questions  of civil  liability  in the present  Directive  by 
providing  for the joint  liability  of the transferee  and 
the transferor.  However,  it agrees  with  the 
Commission  that  it would  be preferable  for  the 
problem  of the joint  liability  of the transferee  and the 
transferor  to be settled  in a separate  instrument.  It 
considers  that  the  question  should  be treated  as 
a matter  of urgency. 
2. Specific  comments 
2.1. Recitals 
The Committee  considers  that  the  fourth  recital 
contains  a statement  which  is too  sweeping  and 
therefore  incorrect.  Accordingly,  this  recital  should 
be amended  to read: 
Whereas  changes  in undertakings'  structure  are 
not always  in line  with  this  purpose,  but on the 
contrary  adversely  affect  conditions  for workers 
on and  off the job,  more  especially  as regards 
preservation  of the  workers'  entitlements  and 
benefits,  and  whereas  the same  problems  arise 
irrespective  of the precise  form  of the takeover. 
2.2. Articles  1 and 2 
1.6. The  text  as it now  stands  offers  no answer  to 
the question  as to whether  the old employer  is still 
liable,  alongside  the new  one,  for workers'  claims 
dating  back  to a time  prior  to the takeover  or merger 
but not yet met  by the old employer  at the time  of 
the operation.  Nor  is it clear  whether  former 
employees  who  left the firm  being  taken  over  before 
the time  of the  takeover  can  enforce  outstanding 
claims  against  the transferee. No comments. 
2.3. Article  3 
2.3.1.  No  changes  are proposed  by the Committee 
to paragraph  (1) of this  Article,  which  provides  that 
in the case  of a change  of employer  the employment 
relationship  entered  into  by the transferor  shall  be 
automatically  transferred  to the  transferee  with  all 
rights  and obligations. 
1.7. The  Committee  understands  that  the 
Commission  has preferred  to consider  these  matters 
as arising  essentially  in connection  with  insolvencies 
and bankruptcies,  and  prefers  that  they  should  be 
settled  as part  of the extensive  work  that  is being 
carried  out  by the  Commission  in this  important 
field. 2.3.2.  The  provisions  of paragraphs  (2) and  (3), 
however,  concerning  the  continued  validity  of 
collective  bargaining  agreements,  prompt  the 
following  comments. 
2.3.3.  In  the  Committee's  view,  collective 
agreements  which  were  binding  on the transferor,  be 
No C 255/28 Official  Journal  of the  European  Communities 7.11.  75 
they plant,  company  or trade  association  agreements, 
should  only  remain  in force  until  a hew  arrangement 
has been  concluded  between  the two  sides.  It should 
be possible  to negotiate  such  arrangements  at any 
time,  for  example  in the  course  of the  procedures 
provided  for in Article  8. 
2.3.4.  Moreover,  the  Committee  does  not  agree 
with  the  distinction  in Article  3 (3) between  trade 
association  collective  agreements  of limited  and 
unlimited  duration  as regards  the  period  for  which 
agreements  are  temporarily  to continue  in force.  It 
considers  that  trade  association  collective  agreements 
of limited  duration  which  are  not  superseded  by a 
new arrangement  should  also  not  remain  applicable 
for longer  than  one  year. 
2.3.5.  Contrary  to the last sentence  of Article  3 (3), 
the previous  conditions  of service  laid  down  in a 
collective  agreement  should  also  continue  to apply 
temporarily  if the  transferee  is bound  by another 
collective  bargaining  agreement  which  also  covers  the 
undertaking  that  has  been  transferred.  Otherwise,  if 
the collective  agreement  governing  the  transferee 
were  less  favourable  than  that  hitherto  applicable  to 
the employees,  there  would  be a risk  that  the change 
of employer  would  automatically  result  in less 
favourable  terms  of employment  for the transferred 
staff. 
2.3.6.  Finally,  the  Committee  would  draw 
attention  to the fact  that  in some  circumstances  there 
could  be  grounds  for  applying  the  collective 
agreement  governing  the transferee  to the transferred 
employees  at once  or before  a year  has  elapsed.  It 
thinks  it is right,  therefore,  to allow  this  matter  to be 
settled  with  the  workers'  representatives  within  the 
framework  of the negotiations  provided  for in Article 
8. Such  a procedure  would  both  allow  imperative 
business  requirements  to be  catered  for  in the 
settlement,  especially  where  a small  firm  is taken  over 
by a large  undertaking,  and  would  take  account  of 
the possibility  that  the new  collective  agreement  may 
be more  favourable  than  that  hitherto  applicable  to 
the transferred  employees. 
2.3.7.  For  these  reasons,  the  Committee  proposes 
that Article  3 (2) and  (3) be amended  to read: 
2. Where  the  rights  and  obligations  arising 
from  the employment  relationship  are  based  on 
plant  or company  collective  agreements  concluded 
by the  transferor,  these  rights  and  obligations shall  be automatically  transferred  to the transferee 
and shall  continue  in force  until  such  time  as 
another  collective  agreement  has  been  concluded 
between  the  parties  concerned. 
3. Where  the  transferee  is not  bound  by the 
same  trade  association's  collective  bargaining 
agreement  as the  transferor,  the transferee  shall 
nevertheless  respect  the terms  of employment  laid 
down  in the  collective  agreement  concluded  by 
the transferor  until  such  time  as another  collective 
agreement  has  been  concluded  between  the 
parties  concerned.  Should  no  other  collective 
agreement  be  concluded  between  the  parties 
within  a period  of one  year  from  the  date  of the 
entry  of the  transferee  into  the  employment 
relationship,  the  trade  association's  collective 
bargaining  agreement,  if any,  by  which  the 
transferee  is bound  shall  apply. 
2.4. Article  4 
2.4.1.  The  Committee  considers  that  before  any 
dismissals  are effected  for 'pressing  business  reasons' 
under  the  second  sentence  of Article  4 (1),  the 
workers'  representatives  must  in all cases  be informed 
and consultations  with  them  held  to try to find  the 
workers  concerned  other  jobs  with  equivalent  v 
advantages. 
The Committee  therefore  proposes  that  the  second 
sentence  of Article  4 (1) be amended  to read: 
This  shall  not apply  to dismissals  necessitated  by 
pressing  business  reasons.  In such  cases,  the 
employer  must  inform  the  workers'  representa-
tives  of  the  planned  dismissals  and  hold 
consultations  with  them  to ensure  that  everything 
possible  is done  to help  the  workers  concerned 
find other  jobs  with  equivalent  advantages. 
2.4.2.  The  wording  of Article  4 (3) is not,  in the 
Committee's  view,  in keeping  with  the object  of this 
provision.  It considers  that  a 'substantial  change'  in 
working  conditions  is not an adequate  criterion.  This 
could  mean  that  even  if there  was  a considerable 
improvement  in his  terms  of  employment,  an 
employee  would  be able  to terminate  the employment 
relationship  with  the  employer  being  held 
responsible. 
2.4.3.  Such  a legal  consequence  could,  however, 
only be intended  where  the  change  in the terms  of 
employment  is to the  employee's  detriment.  The 
Committee  considers  that  this  ought  to be reflected  in 
the text.  It  stresses,  however,  that  changes 
detrimental  to the employee  need  not necessarily  take 
the form  of a deterioration  in material  conditions. 
7.11.  75 Official  Journal  of the  European  Communities No C 255/29 
They  could  also  include  cases  where  the employee  is 
allocated  new,  better-paid  work  but is unable  to do it 
for reasons  of old age  or ill health  or is not prepared 
to accept  the change  in residence  which  the new  post 
entails. 
2.4.4.  The  Committee  therefore  proposes  that 
Article  4 (3) be amended  to read: 
3. Where  a labour  contract  is terminated  by 
the worker  because  a merger  of companies  or a 
transfer  of undertakings  has  brought  about  a 
substantial  adverse  change  in  his  working 
conditions,  such  a termination  shall  be deemed  to 
be due  to the action  of the employer. 
2.5. Article  5 
2.5.1.  The  Committee  thinks  that  it should  be 
brought  out in the wording  of the second  sentence  of 
Article  5 that  an employee  who,  at the  time  of 
signing  his  contract  of employment,  agreed  to a 
possible  transfer  but  under  completely  different 
conditions  is only  obliged  to keep  his commitment  in 
so far as the said  conditions  obtain. 
2.5.2.  Accordingly,  the  Committee  proposes  that 
Article  5 should  read: 
Article  4 shall  apply  analogously  to transfers  of 
workers  from  one  undertaking  to another  which 
are the consequences  of mergers  or takeovers.  It 
shall  not  apply,  however,  if the  worker,  as a 
result  of his  employment  contract,  is bound  to 
accept  transfer  to another  undertaking  and  the 
conditions  of  the  proposed  transfer  are 
compatible  with  those  which  obtained  at the time 
of the signing  of the employment  contract. 
2.6. Article  6 
No changes  are proposed  by the Committee  to this 
Article. 
2.7. Article  7 
2.7.1.  Article  7 (2) needs  to be amended,  in the 
Committee's  view.  It considers  that  it is not necessary 
expressly  to mention  'Community  law',  since  at the 
moment  there  is no Community  law  regulating  the 
election  of  workers'  representatives.  Should 
Community  law  on  the  election  of  workers' representatives  be introduced  subsequently  through 
the Statute  for  the  European  Company  or  in 
connection  with  any  other  regulations,  the proposed 
Directive  could  still  be supplemented  accordingly. 
2.7.2.  On  the  other  hand,  the  Committee  would 
like to see a reference  to collective  agreements  in this 
provision.  It points  out  that  bodies  representing 
workers  can be founded  not only  on laws  but also  on 
the provisions  of collective  agreements.  Therefore, 
application  of Article  7 (1) must  also  be precluded 
where  a collective  agreement  prescribes  the  holding 
of a new  election  of workers'  representatives  when 
the conditions  referred  to in Article  7 (1) obtain.  The 
Committee  considers  that  these  objectives  would  be 
met if the present  wording  'resulting  from  the laws, 
regulations  and  administrative  provisions  in the 
Member  States  or Community  law'  were  replaced  by 
'under  national  law  and  collective  agreements'. 
2.7.3.  The  Committee  also  points  out  that 
application  of Article  7 (1) must  not  be completely 
precluded  where  the  national  law  prescribes  new 
elections  for  merely  some  of the  existing  bodies 
representing  workers.  It therefore  proposes  that 
'where'  be replaced  by 'in so far as'. 
2.7.4.  Finally,  the  Committee  points  out  that  a 
new election  of the  workers'  representatives  can  be 
necessary  for  reasons  other  than  'changes  in the 
composition  of the body  of workers'.  For  example,  a 
new election  may  be necessary  because  only  part  tif a 
business  is taken  over  and  afterwards  run  as an 
independent  unit. 
2.7.5.  For  these  reasons,  the Committee  proposes 
that Article  7 (2) be amended  to read: 
2. Paragraph  1 of this  Article  shall  not apply  in 
so far  as under  national  law  and  collective 
agreements  the  conditions  for  holding  new 
elections  for workers'  representatives  obtain. 
2.8. Article  8 
2.8.1.  The  Committee  notes  first  of all that  the 
introductory  sentence  in Article  8 places  mergers 
between  public  limited  companies  at national  level 
outside  the  scope  of this  Article.  Rules  on  the 
information  and  consultation  of  the  workers' 
representatives  in the case  of mergers  of that  type  are 
laid down  in Article  6 of the  revised  draft  third 
Directive  on mergers.  These  rules  on the information 
of workers  and  their  representatives  are  more 
detailed  that  those  contained  in Article  8 of the 
present  directive  and  include,  moreover,  a time  limit 
No C 255/30 Official  Journal  of the  European  Communities 7.11.75 
for informing  and  consulting  the  workers.  The 
Committee  realizes  that  in the present  Directive,  with 
its wide  scope,  such  more  detailed  provisions  are not 
very practicable.  However,  to preclude  unwarranted 
differences  it thinks  it desirable  that  more  detailed 
legal  safeguards  should  be devised  for other  specific 
forms  of mergers  and  amalgamations  as they  have 
been  for  mergers  of public  limited  companies  at 
national  level.  Here  the Committee  has particularly  in 
mind  international  mergers  of  public  limited 
companies,  mergers  of  private  companies  and 
amalgamations  through  share  transfers.  Such  detailed 
rules  should  be regarded  as implementing  provisions 
of the general  provisions  of Article  8 of the  present 
proposed  Directive. 
2.8.2.  The  Committee  has  doubts  about  the 
wording  of Article  8 (1),  which  states  that  workers' 
representatives  are to be informed  simply  'before'  the 
projected  operation  is carried  out.  This  would  enable 
an employer  to delay  giving  information  until  directly 
before  the  operation  takes  place.  The  Committee 
considered  whether  there  should  be a fixed  time  limit 
to ensure  that  information  was  supplied  in good  time. 
However,  it does  not  consider  this  to be advisable, 
since  the observance  of such  a time  limit  could  entail 
considerable  practical  difficulties  due to the fact  that 
at the time  of conducting  negotiations  on operations 
covered  by  the  proposed  Directive  it is often 
impossible  to predict  when  these  negotiations  will  be 
completed.  On the  other  hand,  the Committee  does 
think  it necessary  to make  it clear  in the wording  that 
the information  has  to be supplied  to the  workers' 
representatives  'sufficiently  in advance  of' the  final 
decision  to undertake  the merger  or takeover. 
2.8.3.  The  Committee  therefore  proposes  that 
Article  8 (1) be amended  to read: 
1. The  transferor  and  the  transferee  shall  be 
obliged  to inform  their  respective  workers' 
representatives,  within  the meaning  of Article 
7, sufficiently  in advance  of the  final  decision 
to undertake  the  merger  or takeover,  of the 
reasons  that  led  them  to consider  such  an 
operation  and  also  of the legal,  economic  and 
social  consequences  it entails  for the workers; 
they shall,  moreover,  indicate  what  measures 
are to be taken  in relation  to the workers.  If 
the workers'  representatives  so request,  a 
discussion  shall  take  place  immediately  on the 
content  of this  information. The Committee  also  proposes  that  the following  be 
added  to Article  8 (1): 
The workers'  representatives  must  be supplied 
with  all the documents  they  need  in order  to have 
the fullest  possible  information  about  the 
projected  operations.  In addition,  the  workers' 
representatives  may  call  in one  or more  experts  of 
their  choice  to assist  them. 
2.8.4.  No  account  has been  taken  in the provisions 
on information  of the fact  that  mergers  between  the 
parent  companies  of groups  will  have  repercussions 
on their  subsidiaries.  The  Committee  considers  that 
the question  of  the  notification  of  workers' 
representatives  in dependent  undertakings  affected  by 
such  operations  also  needs  to be resolved. 
2.8.5.  The  binding  arbitration  procedure  for  the 
settlement  of  disputes  between  workers  and 
employers  in connection  with  changes  in corporate 
structure,  which  is provided  for  in Article  8 (2), 
already  exists  in some  Member  States  and  has 
worked  satisfactorily  there.  The  Committee  would 
point  out,  however,  that  this  arbitration  procedure  is 
alien  to the  legal  system  in other  Member  States. 
These  countries  have  other  procedures  for  dealing 
with  disputes,  and  they  should  be allowed  to retain 
them,  since  these  procedures  too  have  worked 
satisfactorily  in  the  countries  concerned.  In 
particular,  it is not  usual  in many  cases  for  the 
decision  on possible  claims  by employees  against  the 
employer  to be left  to an uninvolved  third  party  or 
for an arbitration  award  to be accorded  binding  force 
if the two  sides  have  not agreed  to abide  by it from 
the start.  In the Committee's  view  it should  therefore 
be left  to the two  sides  to decide  whether  to use  a 
procedure  provided  for  under  national  law  or 
conforming  to national  practice  or to apply  the 
arbitration  procedure  provided  for  in Article  8 (2), 
and in the  latter  case  the arbitration  award  should 
only be binding  if the two  sides  have  agreed  to abide 
by it from  the start.  For these  reasons,  the Committee 
proposes  that  Article  8 (2) be amended  to read: 
If the discussion  provided  for  in paragraph  1 does 
not produce  a result  which  is to the satisfaction  of 
both parties,  they  may  initiate,  a procedure 
provided  for  under  national  law  or conforming  to 
national  practice.  Instead  of  using  such  a 
procedure,  the  parties  may  refer  the matter  to an 
arbitration  board.  This  arbitration  board  shall 
consist  of a number  of assessors,  of whom  half 
shall  be appointed  by  the  employer  concerned 
and the  other  half  by the  representatives  of the 
workers,  and  a chairman  appointed  by  common 
consent  by the two  parties  in question  or,  failing 
7. 11. 75 Official  Journal  of the European  Communities No C 255/31 
that, by  the  competent  court.  The  arbitration 
board  shall  give  a binding  decision  as to what 
measures  shall  be taken  for  the  benefit  of the 
workers,  if both  parties  have  agreed  in advance 
that such  decision  shall  be binding. 
2.8.6.  It  follows  from  Article  8 (3) that  disregard 
of the obligations  arising  from  paragraphs  (1) and  (2) 
will not  make  the  undertakings'  operation  invalid. 
The Committee  trusts,  however,  that  .other  penalties 
are envisaged  for  such  cases;  the  Directive  should 
instruct  the  Member  States  to provide  for  such 
sanctions.  At all events,  without  penalties  of some 
kind  the procedures  laid  down  in paragraphs  (1) and 
(2) would  lose  their  importance. 
2.8.7.  The  wording  of Article  8 (3)  should  be 
aligned  with  the changes  proposed  to paragraph  (2): 
3. The  obligation  to hold  immediate  discussions 
in paragraph  (1) and  the procedures  contained 
in paragraph  (2)  are  not  to prejudice  the 
operation. 
2.9. Article  9 
2.9.1.  Article  9 (1)  stipulates  that  claims  under 
supplemental  occupational  pensions  and  related 
benefit  schemes  by workers  who,  at the time  of the 
change  of employer,  have  already  withdrawn  from 
the employment  relationship  can  only  be  made 
against  the transferee  where  a special  body  of assets 
out of which  such  claims  are  to be met  is also 
transferred  to  the  transferee.  The  Committee 
considers,  however,  that  the transferee  must  be liable 
also for  benefits  promised  by the  transferor  which 
were  to be covered  from  current  operating  receipts 
and not a special  body  of assets. 
2.9.2.  Therefore,  the  Committee  proposes  that 
Article  9 (1) be amended  to read: 
1. Claims  under  supplemental  occupational 
pensions  and  related  benefit  schemes  by workers 
who,  at the time  of the  merger  or takeover  had 
already  withdrawn  from  the  employment 
relationship,  may,  in  so  far  as  the  laws, 
regulations  and  administrative  provisions  in the 
Member  States  do  not  lay  down  at least 
equivalent  rules,  be made  against  the  transferee, 
unless  there  is a special  body  of assets  out  of 
which  such  claims  can  be met  which  is not 
transferred  to the transferee. 2.9.3.  No  changes  are proposed  by the Committee 
to Article  9.(2). 
2.9.4.  The  Committee  fears  that  the  wording  of 
Article  9 (3) could  lead  to a plurality  of claims  by 
employees.  It is right  that  a transferred  employee 
should  retain  the  claims  and  entitlements  he has 
already  acquired,  but  the  present  text  makes  it 
possible  for  him  to make  additional  claims  under 
arrangements  in force  in the  transferee'  s business. 
The Committee  considers  that  the possibility  of such 
double  claims  being  made  should  be precluded  by 
making  the text  clearer. 
2.9.5.  Preferential  treatment  of transferred  workers 
which  does  not  seem  justifiable  could  also  occur  if 
the transferor's  business  has been  in existence  longer 
than  the transferee's  and  a pensions  scheme  geared  to 
the number  of years  of service  is operated  by the 
transferee  but  was  not  by the  transferor.  If, for 
example,  the  transferee  has  a scheme  under  which 
employees  are to receive  supplementary  benefits  after 
20 year's  service,  and  his  business  has  been  in 
existence  for  only  five  years;  whereas  the  business 
which  has  been  taken  over  had  been  operating  for 
20 years,  the transferred  employees  could  immediately 
make  claims  against  the transferee  which  they  did not 
have,  vis-a-vis  the transferor,  and  would  not have  had, 
vis-a-vis  the  transferee,  if they  had  been  working  in 
his business  from  the start. 
2.9.6.  For  these  reasons,  the  Committee  proposes 
that Article  9 (3) be amended  to read: 
3. Entitlement  to benefits  from  supplemental 
occupational  pensions  and  related  benefit  schemes 
for workers  whose  employment  relationship  had 
not ended  at the time  of the merger  or takeover 
shall  be maintained  and  shall  apply  also,  vis-a-vis 
the transferee.  The  length  of service  with  the 
transferee  after  the  merger  or take  over  shall  be 
taken  into  account  in the entitlement. 
The transferee  and  the  competent  body 
representing  the  workers  ,may  agree  that 
transferred  workers'  claims  to benefits  from 
supplemental  occupational  pensions  and  related 
benefit  schemes  shall  be determined  in accordance 
with the  arrangements  in force  in the transferee's 
business  instead  of with  those  applicable  in the 
relationship  with  the  transferor  prior  to the 
merger  or takeover.  In such  a case  the entitlement 
to the  said  benefits  shall  be governed  by  the 
provisions  of Article  6. 
No C 255/32 Official  Journal  of the European  Communities 7.11.  75 
The entitlement  of transferred  workers  to benefits 
from  supplemental  occupational  pensions  atid 
related  benefit  schemes  under  arrangements  in 
force  in the  transferee's  business  shall  not  be 
governed  by the provisions  of Article  6 if, at the 
time of the  merger  or takeover,  there  were  no 
arrangements  in the transferor's  business  for  the 
granting  of  claims  under  supplemental 
occupational  pensions  and  related  benefit 
schemes. 
2.10.  Article  10 
2.10.1.  The  Committee  considered  whether  this 
provision  should  be left  in the  proposed  Directive 
now that  the  Commission  intends  to settle  in a 
Council  Regulation  the whole  question  of the conflict 
rules  to be applied  in the Community  in respect  of 
employment  relationships.  Since  the final  content  of 
the planned  Regulation  is not  yet  known,  the 
retention  of Article  10 as it stands,  particularly  its 
second  paragraph,  might  lead  to inconsistencies 
between  the  proposed  Directive  and  the  planned 
Regulation  on conflict  rules  on the question  of which 
labour  laws  are applicable. 
2.10.2.  In  spite  of this,  the Committee  is against 
total  deletion  of Article  10.  It feels  that  since  the 
Directive  is meant  to settle  all the  questions  which 
might  arise  in connection  with  a change  of employer, 
it should,  if only  for  the  sake  of completeness,  be 
made  clear  that  in principle  mergers  and  takeovers  do 
not mean  that  other  labour  laws  become  applicable. 
2.10.3.  The  Committee  would  also  draw  attention 
to the need  to ensure  that  the present  Directive  and 
the planned  Regulation  on conflict  rules  do not 
contain  provisions  which  are contradictory.  It points 
out in this  connection  that  under  Article  10 (2) of the 
proposed  Directive,  the transfer  of the place  of work 
to another  Member  State  is sufficient  by itself  to 
entail  non-application  of Article  10 (1);  whereas  in 
the regulation  on conflict  rules  the  posting  of the 
employee  to another  country  in the Community  does 
not always  automatically  entail  a change  of the 
labour  laws  applicable  to  his  employment 
relationship.  Finally,  the  Committee  draws  express 
attention  to its Opinion  of November  1972  on the 
Commission  proposal  for  a Council  Regulation  on 
the conflict  rules  to be applied  in the Community  in 
respect  of employment  relationships.  In that  Opinion 
the Committee  took  the line  that  even  in the case  of a 
transfer  and  a consequent  change  of the labour  laws 
applicable,  the  protection  of  the  employment relationship  enjoyed  under  the  labour  legislation 
previously  applicable  had  to be maintained.  In the 
Committee's  view  this  should  also  apply  in the cases 
mentioned  in Article  10 (2). 
2.10.4.  For  these  reasons  the  Committee, 
proceeding  on the assumption  that  the Regulation  on 
international  conflict  rules  will  enter  into  force  before 
this Directive,  recommends  that  Article  10 (2) be 
amended  to read: 
2. Paragraph  1 of this  Article  shall  be without 
prejudice  to Regulation  No...  of  the  Council 
of on  the conflict  rules  to be applied  in the 
Community  in  respect  of  employment 
relationships. 
2.11.  Article  11 
% 
2.11.1.  The  Committee  considered  whether 
concentrations  between  undertakings  should  also  fall 
within  the scope  of the Directive.  The  purpose  of the 
Directive  is to protect  employees  against  any  loss  of 
acquired  rights  and  entitlements  when  a new 
employer  takes  over  from  the existing  one,  as in the 
case of mergers  and  takeovers.  Concentrations 
between  undertakings,  however,  do not  involve  a 
change  of employer  or have  direct  effects  on the 
individual  employment  relationships. 
2.11.2.  On  the  other  hand,  the  Committee 
considers  that  a concentration  between  undertakings 
can bring  about  a situation  in which  a previously 
independent  undertaking  is so dominated  by "another 
undertaking  that  the  employer  no longer  has  any 
control  over  decisions  affecting  his employees  and  is 
forced  to change  his personnel  policy.  The  need  to 
protect  workers  against  the  loss  of rights  and 
entitlements  in such  cases  is, in the Committee's  view, 
just as great  as in the case  of mergers  and  takeovers. 
The Committee  is,  therefore,  in favour  of the 
provisions  of the  Directive  being  applicable  in 
principle  to concentrations  between  undertakings. 
2.11.3  The  Committee  observes,  however,  that  the 
wording  of the  Articles  referred  to in Article  11 
precludes  their  being  directly  applied  to 
concentrations  between  undertakings,  since  they  talk 
of the  parties  of 'transferor'  and  'transferee',  which 
do not  exist  in concentrations.  Therefore,  the 
Committee  thinks  it would  be better  to state  that  the 
directive  as a whole  is applicable,  mutatis  mutandis, 
to such  structural  measures. 
7.11.75  Official  Journal  of the  European  Communities  No  C 255/33 
2.11.4  The  Committee  also  considered  the 
question  whether  the  reference  in Article  11 to the 
Council  Regulation  on the  control  of concentrations 
served  a useful  purpose.  It observes,  however,  that 
omission  of this  reference  would  mean  that  the 
Directive  would  have  to give  its own  definition  of 
'concentrations  between  undertakings',  because  if 
it did  not,  there  would  be  considerable  legal 
uncertainty,  even  at national  level.  The  Committee  is 
therefore  in favour  of the reference  being  retained.  It 
points  out,  however,  that  the  definition  of 
concentrations  between  undertakings  now  given  in 
Article  2 of the Council  Regulation  on the control  of 
concentrations  will  have  to be  included  in the 
Directive  if the  latter  enters  into  force  before  the 
Regulation. 
2.11.5  For  these  reasons  the  Committee  suggests 
that Article  11 be amended  to read: The provisions  of  this  Directive  shall  apply, 
mutatis  mutandis,  to  concentrations  between 
undertakings,  as defined  in Article  2 of the 
Regulation  No  ...  of the  Council  of ...  on 
the control  of concentrations,  in all cases  where 
the consequences  of  the  concentrations  are  the 
same  as those  of the  operations  covered  by  the 
present  Directive  and  irrespective  of whether  the 
concentration  involves  undertakings  in  the 
territory  of one  or more  Member  States  or in the 
territories  of one  or more  Member  States  and  one 
or more  third  countries. 
2.12.  No  changes  are proposed  by the  Committee 
to Articles  12 to 14. 
Done  at Brussels,  24 April  1975. 
The Chairman 
of the Economic  and  Social  Committee 
Henri  CANONGE 
ANNEX 
to the Opinion  of the Economic  and Social  Committee 
The following  amendments  were  rejected  during  the discussion: 
Alternative  A — Item  1.8 
The Committee  cannot  accept  this  view,  for a large  number  of insolvencies  and  bankruptcies 
occur  outside  the context  of mergers,  and  a large  number  of mergers  and  takeovers  occur 
without  there  being  any  danger  of an insolvency  or bankruptcy.  It has reached  the conclusion 
that the present  Directive  should  provide  for joint  liability  of the transferee  and the transferor  in 
respect  of all workers'  claims  arising  against  the transferor  before  the takeover.  This  joint 
liability  already  exists  under  the civil  law of at least  one Member  State.  The  Committee  wishes 
to stress  that  if the  joint  liability  principle  were  not  applied,  it would  be possible  for 
managements  to sell  ailing  establishments  or firms  simply  as a means  of avoiding  their 
obligations  vis-a-vis  the workers. 
Voting: 
For: 53 
Against:  55 
Abstentions:  2. 
Item  2.8. — Article  8 
Replace  text  from  'However,  to preclude  unwarranted  differences...  present  proposed 
Directive'  onwards  by: 
No C 255/34 Official  Journal  of the  European  Communities 7.11.75 
However,  it considers  that  unwarranted  fundamental  differences  resulting  from  the 
adoption  of two  distinct  directives  shduld  be avoided,  and  so if the  Council  adopts  the 
third  directive  in the form  proposed  by the  Commission,  the present  proposed  Directive 
will have  to be revised. 
Reasons 
We do not think  it in order  to prejudge  the decision  to be taken  by the Council  on the revised 
draft  of the  third  Directive,  especially  as various  provisions  of the  said  Directive  are  very 
controversial. 
Voting 
For: 35 
Against:  45 
Abstentions:  10. 
Item  2.8.3 
Delete  from  the proposed  amended  version  of Article  8 (1) 'and  before  the final  decision  to 
undertake  it is made'. 
Reasons 
Decisions  to carry  out  mergers  and  takeovers  are  usually  taken  in several  stages.  It is hence 
difficult  to specify  the time  of the  final  decision  without  giving  rise  to continual  conflicts  of 
interpretation.  Moreover,  in the firm's  interest  it is necessary  that  such  decisions  do not become 
known  to the general  public  and  hence  to competitors  too  soon.  For  the employees'  interests, 
which  have  to be protected,  the exact  time  of the decision  to undertake  the merger  or takeover 
is of only  secondary  importance.  For  them  the most  important  thing  is the protection  they  are 
to receive  and  the nature  and  extent  of this  protection  can  only  really  be talked  about  after  the 
taking  of the decision. 
Voting: 
For: 33 
Against:  49 
Abstentions:  9. 
Item  2.8.3. 
Amend  the second  paragraph  of this  item  to read: 
The workers'  representatives  must  be supplied  with  all the documents  they  need  in order  to 
have  the fullest  possible  information  about  the projected  operations.  By agreement  with  the 
transferee  and  the transferor,  the  workers'  representatives  may  call  in one  or more  ^ experts 
of their  choice  to assist  them,  in so far as this  is necessary  for  the  discussion  of the 
situation. 
Reason 
The negotiations  will  be about  important  interests  of the employees  and  important  interests  of 
the firm.  Since  piany  of the  subjects  discussed  must  be kept  secret  to protect  the  firm's 
competitiveness,  outsiders  who  are not  representatives  of the workers  should  be admitted  only 
with  the consent  of the transferee  and  transferor. 
Voting: 
For: 22 
Against:  45 
Abstentions:  12. 
Item  2.8.3 
Proposed  addition  to Article  8 (1). 
After  '... projected  operations',  add  the following  sentence: 
Any informatioa  contained  in such  documents  shall  be treated  as confidential  if, and  to 
the extent  that  workers'  representatives  are requested  to do so either  by the transferor  or 
by the transferee. 
7.11.75 Official  Journal  of the European  Communities No C 255/35 
Reason 
Information  about  mergers  and  amalgamations  may  need  to be kept  confidential  from 
competitors.  Premature  release  of such  information  could  prejudice  the whole  operation  and  the 
future  position  of employees  themselves. 
It is understood  that  a similar  provision  is included  in the laws  governing  the establishment  ancl 
operation  of Works  Councils  in West  Germany  and  the Netherlands  and  it would  appear  to be 
equally  important  in this  context. 
Voting: 
For: 40 
Against:  48 
Abstentions:  0. 
Item  2.8.5 
Delete  the passage  beginning  with  'In the Committee's  view  it should  therefore  be left...'  up to 
the end  of item  2.8.5  '... have  agreed  in advance  that  such  decision  shall  be binding',  and 
replace  by the following: 
Therefore  the Committee  considers  that  it would  be preferable  to let the two  sides  initiate 
the procedure  provided  for under  their  national  law or conforming  to national  practice. 
For these  reasons  the Committee  proposes  that  Article  8 be amended  by replacing  the 
second  subparagraph  of Article  8 (2) with: 
If the discussions  and  negotiations  provided  for above  do not produce  a result  which  is to 
the satisfaction  of both  parties,  they  may  initiate  whichever  procedure  is provided  for 
under  national  law or accords  with  national  practice. 
Voting: 
For: 20 
Against:  41 
Abstentions:  14. 
Items  2.11.2.,  2.11.3.,  2.11.4  and 2.11.5 
Replace  (Specific  comments)  by: 
2.11.2.  In  the Committee's  view,  the need  to protect  workers  against  changes  in their 
rights  can be just as great  in concentrations  between  undertakings  as in the case  of mergers 
and takeovers. 
2.11.3.  However,  the  present  Directive  cannot  be directly  applied  to concentrations 
between  undertakings,  since  its operation  is based  on the  transfer  of the  employment 
relationship  from  the 'transferor'  to the 'transferee'. 
In concentrations  between  undertakings  there  are no such  parties. 
2.11.4.  Furthermore,  concentrations  between  undertakings  has not yet been  defined  in a 
Community  instrument.  The  legal  uncertainty  surrounding  this concept  will  not be resolved 
until  the draft  Council  Regulation  on the control  of concentrations  between  undertakings  is 
adopted. 
2.11.5.  The  Section  would  therefore  like  to see workers'  rights  protected  on the lines 
proposed  in the  present  draft  Directive  also  in the  case  of concentrations  between 
undertakings,  but  it considers  that  this  protection  should  be provided  in another 
instrument,  not in the Directive. 
The Section  therefore  calls  for deletion  of Article  11. 
Reason 
The proposer  recognizes  the need  to protect  the employees  of firms  carrying  out concentrations 
in so far as the concentration  affects  the workers'  rights. 
No C 255/36 Official  Journal  of the  European  Communities 7.11.  75 
This protection  cannot,  however,  be afforded  in the existing  uncertainty  by an instrument 
whose  basic  conception  is geared  to a transfer  of ownership  between  a transferor  and  a 
transferee. 
Voting: 
For: 41 
Against:  51 
Abstentions:  4.