OPINION OF ADVOCATE GENERAL

TANCHEV

delivered on 1 February 2017 ( 1 )

Case C‑336/15

Unionen

v

Almega Tjänsteförbunden

ISS Facility Services AB

(Request for a preliminary ruling from the Arbetsdomstolen (Labour Court, Sweden))

‛Social policy — Directive 2001/23/EC — Safeguarding of employees rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses — Article 3(1) and (3) — Rights of a financial nature — Service periods to be taken into account in determining length of notice for termination of employment’

1. In 2005 the employment of BSA with the firm Apoteket AB was transferred to ISS Facility Services AB (‘the second defendant’) and in 2008 and 2009 the employment of JAH, JH and BL with the firm AstraZeneca AB was also transferred to the second defendant. However, in 2011 the second defendant made all four of these employees redundant.

2. The question arising in this case is whether Article 3(1) of Council Directive 2001/23/EC (‘the Transfer of Undertakings Directive’) ( 2 ) obliges the second defendant to take into account service undertaken with the transferors AstraZeneca AB and Apoteket AB when calculating notice periods for the termination of employment of the four employees concerned, or are such notice periods only to be calculated by reference to employment completed with the transferee second defendant?

3. The legal issues requiring resolution in this case feature an additional twist. Pursuant to the discretion afforded to Member States under Article 3(3), second sentence, of the Transfer of Undertakings Directive, Swedish law only obliges transferees like the second defendant to comply with the collective agreements binding transferors for one year from the date of the transfer (‘the one year option’). By the time BSA JAH, JH and BL were given notice of termination of their employment with the second defendant, this period had lapsed. Yet the collective agreement that then came to govern relations between the four employees and the second defendant would appear, from the case file, to have been negotiated at or prior to the date of transfer, and contained identically worded provisions on the role that length of service plays in the calculation of notice periods for termination of employment. ( 3 ) In these circumstances, does activation under Swedish law of the one year option provided for in Article 3(3) of the Transfer of Undertakings Directive make any difference to the interpretation to be afforded to Article 3(1)?

I. Legal framework

A. EU law

4. Chapter II of the Transfer of Undertakings Directive entitled ’Safeguarding of employees’ rights’ contains Article 3. Article 3(1) and (3) states: ‘1. The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee. … 3. Following the transfer, the transferee shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement, until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement. Member States may limit the period for observing such terms and conditions with the proviso that it shall not be less than a year. …’

B. Swedish law

5. According to the order for reference, paragraph 6b of the lagen (1982:80) om anställningsskydd (Law (1982:80) on employment protection; anställningsskyddslagen; ‘LAS’) was introduced in order to implement the Transfer of Undertakings Directive into Swedish law. The LAS provides, inter alia, that when an undertaking, an activity or part of an activity is transferred from one employer to another, the rights and obligations arising from the contract of employment and the conditions of employment which apply at the time of the transfer are also transferred to the new employer.

6. The order for reference further states that paragraph 28 of the lagen (1976:580) om medbestämmande i arbetslivet (Law (1976:580) on workers’ participation in decisions; medbestämmandelagen; ‘MBL’) transposed into Swedish law Article 3(3) of the Transfer of Undertakings Directive. The MBL contains provisions on the effects which are produced with regard to collective agreements on those transfers of undertakings which are covered by Paragraph 6b of the LAS. According to the order for reference, it follows from the provision that the starting point is that the transferee becomes bound by the applicable parts of the collective agreement by which the transferor was bound. In accordance with the second sentence of the first subparagraph of the provision, it does not apply where the transferee is already bound by another collective agreement which can be applied to the employees who transfer with the undertaking.

7. The order for reference also says that, in such a situation, the transferee is, however, required, pursuant to the provision’s third paragraph, to apply for one year after the transfer the conditions of employment in the collective agreement which applied to the previous employer. Under that provision, the conditions are to be applied in the same way as the previous employer was required to apply them. However, that does not apply once the collective agreement is no longer in force or once a new collective agreement has begun to apply to the transferred employees.

II. The facts in the main proceedings and the question referred for a preliminary ruling

8. Unionen, a Swedish Trade Union (‘the applicant trade union’), has brought an action before the Arbetsdomstolen (Labour Court, Sweden) claiming that the second defendant should be ordered to pay compensation to it and BSA, JAH, JH and BL, due to harm arising from, inter alia, failure to comply with the Article 3 of the Transfer of Undertakings Directive.

9. Almega Tjänsteförbunden (‘the first defendant’) is an employer’s organisation of which the second defendant is a member. Both the first and second defendant contend that Article 3(1) of the Transfer of Undertakings Directive does not oblige transferees to take into account the length of employment served with transferors when determining notice periods for termination of employment, while the applicant trade union argues that it does. The defendants also seek to rely on Article 3(3) of the Transfer of Undertakings Directive, and the fact that more than one year had passed since the respective dates of transfer of employment of BSA, JAH, JH and BL when they were issued notice of termination of their employment, so that the transferee second defendant was no longer bound by the collective agreement that bound the transferor.

10. BSA, JAH, JH and BL are members of the applicant trade union and are employed by the second defendant.

11. BSA commenced employment with Apoteket AB in 1997. On 9 May 2005, her employment was transferred to the second defendant. Thus, she had been employed by Apoteket AB for 7 years at the time of the transfer of her employment to the second defendant and was aged 49 years. ( 4 )

12. On 27 July 2011, the second defendant made BSA redundant and gave her notice of termination of six months. When she was given notice of redundancy, she was 56 years old and had been employed contiguously by Apoteket AB and the second defendant combined for over 10 years, but for only just over 6 years by the second defendant.

13. JAH commenced employment with AstraZeneca AB in August 1969 and JH commenced employment with AstraZeneca AB in October 1972. Their employment was transferred to the second defendant on 1 May 2009. Thus, at the time of the transfer, JAH had been employed by AstraZeneca AB for 39 years and JH for 36 years. ( 5 ) Both JAH and JH were aged over 55 at the time of the transfer.

14. Their colleague BL started his employment with AstraZeneca AB in March 1976 and his employment was transferred to the second defendant on 1 May 2008, at which point he was aged 54 years and 11 months. At the time of the transfer BL had been employed by AstraZeneca AB for just over 32 years.

15. As mentioned above, BSA was made redundant by the second defendant on 27 July 2011. JAH, JH and BL were made redundant on 31 October 2011. The defendant initially provided notice of termination of six months. Thereafter, the notice period was extended by five months. All were over 55 years of age when given notice of redundancy, and had worked well over 10 years contiguously for either Apoteket AB or AstraZeneca AB and the second defendant.

16. However, at the time of the notice of termination all of them had been employed for far shorter periods by the second defendant taken alone. It would seem from the case file that, in the case of JAH and JH they had both been employed for 2 years and 6 months, BL 3 years and 6 months, and, as noted above, BSA for 6 years and almost 3 months.

17. When the transfers took place, both Apoteket AB and AstraZeneca AB were bound by collective agreements which contained provisions on the right to an extension of the notice period to an additional 6 months in the case of employees made redundant who had reached the age of 55 years at the time of the notice of redundancy and who had a contiguous length of service of 10 years. According to the written observations of the applicant trade union, the agreement binding AstaZeneca AB had been struck with the applicant trade union and an employers’ organisation of which AstraZeneca was a member.

18. In addition to this, the first and second defendants were tied, at the respective dates of transfer of employment, by a collective agreement with the applicant trade union that contained provisions on length of service and termination of employment that were identically worded with those in the collective agreement binding Apoteket AB and AstraZeneca AB. The agreement between the applicant trade union and the first defendant contains, inter alia, the following provisions. ‘14.3.2 Notice period The notice period for the employer is as follows, unless other conditions apply under 14.4 or follow from 14.4–14.6. Employer’s notice period in months Length of service Notice period with the company Less than 2 years 1 month 2 to 4 years 2 months 4 to 6 years 3 months 6 to 8 years 4 months 8 to 10 years 5 months more than 10 years 6 months 14.3.3 Extended notice period in certain cases Where an employee who has been given notice of redundancy has reached the age of 55 years at the date of the notice and has worked continuously for a period of 10 years, the notice period shall be extended by six months. (That provision is linked to the Omställningsavtalet (End of employment assistance agreement)). This shall not apply to an employee who has reached the age of 65 years when notice of termination is given.’

19. In those circumstances, the Arbetsdomstolen (Labour Court) referred the following question for a preliminary ruling. ‘Is it compatible with the Transfer of Undertakings Directive, after a year has elapsed following the transfer of an undertaking, on application of a provision in the transferee’s collective agreement which means that, where a certain contiguous length of service with a single employer is a condition for an extended notice period to be granted, not to take account of the length of service with the transferor, when the employees, under an identical provision in the collective agreement which applied to the transferor, had the right to have that length of service taken into account?’

20. Written observations were submitted to the Court by the applicant trade union, the defendants, the French Government and the European Commission. All except the French Government participated in the hearing that took place on 17 November 2016.

III. Assessment

A. Introduction

21. The applicant trade union argues that, on a proper construction of Articles 3(1) and (3) of the Transfer of Undertakings Directive BSA, JAH, JH and BL are entitled to the extended notice period referred to in clause 14.3.3 (reproduced above). This is contested by the first and second defendants because, inter alia, none of BSA, JAH, JH and BL have been employed with the second defendant for more than 10 years, and because rules on length of notice of termination periods in a collective agreement are not ‘rights’ that are protected by Article 3 of the Transfer of Undertakings Directive.

B. Article 3 (1) of the Transfer of Undertakings Directive

22. At the outset, I acknowledge that Directive 2001/23 is intended to achieve only partial harmonisation in this area, and that it does not aim at establishing a uniform level of protection throughout the Community on the basis of common criteria. ( 6 ) Equally, however, the case-law of the Court has established that, the Transfer of Undertakings Directive is ‘intended to safeguard the rights of workers in the event of a change of employer by making it possible for them to continue to work for the new employer on the same conditions as those agreed with the transferor’. ( 7 )

23. Thus, while length of service with the transferor does not as such constitute a right under Article 3(1) of the Transfer of Undertakings Directive which employees may assert against a new employer, length of service ‘is used to determine certain rights of employees of a financial nature, and it is those rights which will have to be maintained by the transferee in the same way as the transferor’. ( 8 ) The Court has provided examples of such rights. They have included, and specifically, ‘a termination payment’. ( 9 )

24. Therefore, in calculating termination payments, ‘the transferee must take into account the entire length of service of the employees transferred, in so far as his obligation to do so derives from the employment relationship between those employees and the transferor, and in accordance with the terms agreed in that relationship’. ( 10 )

25. As pointed out in the written observations of the French Government, a six month extension of a notice period is equivalent to six months of salary. Thus, given that length of service is central to determining the sum of a termination payment, Article 3(1) of the Transfer of Undertakings Directive necessarily protects BSA, JAH, JH, and BL with respect to the factors that are pertinent to that calculation. ( 11 )

26. I acknowledge that the Court has held that Article 3(1) of the Transfer of Undertakings Directive does not preclude the Member States from allowing the employment relationship to be altered in a manner unfavourable to employees in situations other than the transfer, in particular with regard to protection against dismissal and conditions of remuneration. ( 12 ) However, this is subject to the strict proviso that ‘the transfer of the undertaking itself may never constitute the reason for that amendment’. ( 13 )

27. The reason for the change in remuneration must necessarily be the transfer when, as is the case here, there has been no re-negotiation, independently of the transfer, of the length of service the employer is to take into account in the determination of notice periods for the termination of employment. In other words, the employment relationship has not been ‘altered in a manner unfavourable to employees in situations other than the transfer … with regard to … conditions of remuneration’ (my emphasis). ( 14 ) The collective agreements binding transferor and transferee, at the date of the respective transfers, contained identically worded provisions on this issue, so there has been no agreement not to guarantee certain working conditions beyond a particular date. ( 15 )

28. The first and second defendants argue that, given that the collective agreement which bound the transferors made no express reference to periods of employment served with previous employers as being relevant to the calculation of notice periods for termination of employment, then the transferee second defendant cannot be bound to take into account the length of service with the transferors.

29. However, such an interpretation of the latitude inherent in the Transfer of Undertakings Directive which allows the employment relationship to be altered in a manner unfavourable to employees, provided that the transfer is not the reason for the amendment, ( 16 ) would be inconsistent with the objectives pursued by the Transfer of Undertakings Directive. These are reflected in its recital 3, which states that it is necessary to provide for protection of employees in the event of a change of employer, and in particular to ensure that their rights are safeguarded. ( 17 )

30. The Court has repeatedly held that the objective of the Transfer of Undertakings Directive consists, in essence, of preventing workers subject to the transfer from being placed in a less favourable position solely as a result of the transfer. ( 18 )

31. As explained by the legal representative of the applicant trade union at the hearing, if the employees concerned had remained in the employment of the transferors, they would have been entitled to the extended notice period provided for in both collective agreements. In the absence of evidence of any other causal event resulting in reduction of the notice period, such as a new agreement reached after negotiation that is unrelated to the transfer, the contraction in the notice period is inevitably to be attributed to the transfer.

C. Article 3(3) of the Transfer of Undertakings Directive

32. Article 3(3), second sentence, of the Transfer of Undertakings Directive, ( 19 ) and the one year option it affords with respect to the period in which the transferee shall be bound to observe the terms and conditions of the collective agreement binding the transferor, in no way changes my conclusions on the interpretation of Article 3(1) of the Transfer of Undertakings Directive. First, as already noted, the collective agreement between the applicant trade union and the first and second defendants does not alter the wording of provisions on length of service and termination notice periods that appeared in the collective agreement binding the transferor. Thus, the fact that one collective agreement ceases to have effect after one year and another commences is immaterial.

33. Second, the Court has held that Member State implementation of the facility in Article 3(3), second sentence, of the Transfer of Undertakings Directive to replace, with immediate effect, the conditions which the transferred workers enjoyed under the collective agreement with the transferor with those laid down by the collective agreement in force with the transferee cannot have the aim or effect of imposing on those workers conditions which are, overall, less favourable than those applicable before the transfer. ( 20 ) The same must necessarily be the case with respect to the one year option when the relevant terms of the pertinent collective agreements are identically worded. ( 21 )

D. Horizontal application of The Transfer of Undertakings Directive

34. Finally, in their written observations the defendants contend that an interpretation of the Transfer of Undertakings Directive that differs from that which they have advocated would result in breach of legal certainty, a prohibited imposition of an obligation on a private individual due to (unlawful) horizontal application of a directive, and equally prohibited contra legem interpretation of national law, particularly with respect to the activation by Sweden of the one year option. ( 22 )

35. It does not appear from the case file that any question of contra legem interpretation of national law arises in this case, because neither of the collective agreements in issue, or the relevant statutory rules (the LAS and the MBL) compel the removal of the period of employment with transferors from the calculation of notice of termination periods binding transferees. ( 23 )

36. Further, it is well established in the Court’s case-law that neither adverse ramifications for private parties nor departure from settled national case-law are impediments to the obligation on Member State courts to do all they can to achieve the result sought by the directive concerned and consequently comply with the third paragraph of Article 288 TFEU. The detailed rules on how this is to be secured by a national court, in the context of application of directives in disputes of a horizontal nature, was recently considered by the Grand Chamber of the Court in judgment of 19 April 2016, DI, C‑441/14 (EU:C:2016:278).

IV. Conclusion

37. In the light of all the foregoing considerations, I am of the opinion that the Court should answer the question raised by the Arbetsdomstolen (Labour Court, Sweden) to the following effect: In the circumstances of the main proceedings, Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses requires the inclusion, even after a year has elapsed from the date of transfer of an undertaking, of periods of service an employee has completed with the transferor in the calculation of lengths of service relevant to the determination of the redundancy notice period that the transferee is obliged to respect.

( 1 ) Original language: English.

( 2 ) Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses (OJ 2001 L 82, p. 16).

( 3 ) According to the order for reference. At the hearing the representative of the first defendant said that the clauses were slightly different, but without elaboration as to detail.

( 4 ) According to the written observations of the applicant trade union.

( 5 ) According to the written observations of the applicant trade union.

( 6 ) Judgment of 11 September 2014, Österreichischer Gewerkschaftsbund, C‑328/13, EU:C:2014:2197, paragraph 22 and the case-law cited.

( 7 ) Judgment of 14 September 2000, Collino and Chiappero, C‑343/98, EU:C:2000:441, paragraph 49 and case-law cited. This case and judgment of 6 September 2011, Scattolon, C‑108/10, EU:C:2011:542, are both central to resolving the dispute and both concerned the interpretation of Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of businesses (OJ 1977 L 61, p. 26) rather than its successor measure, the Transfer of Undertakings Directive. However, Article 3(1) and (3) of the Transfer of Undertakings Directive essentially corresponds to Article 3(1) and (2) of Directive 77/187, although the former contains amendments that did not appear in the latter.

( 8 ) Ibid., paragraph 50. See also judgment of 6 September 2011, Scattolon, C‑108/10, EU:C:2011:542, paragraphs 69 and 70.

( 9 ) Ibid., paragraph 51.

( 10 ) Ibid.

( 11 ) A similar conclusion was reached by the EFTA Court in Case E‑10/14, Enes Deveci and Others v Scandanavian Airlines System Denmark-Norway-Sweden, judgment of 18 December 2014, paragraph 83, in a context in which length of service was relevant to the calculation of salaries. There it was held that ‘Article 3 of the Directive precludes the possibility that transferred employees suffer a substantial loss of income, in comparison with their situation immediately prior to the transfer, because the duration of their service with the transferor is not sufficiently taken into account when their starting salary position at the transferee is determined, considering the equivalent duration of service of those employees already in the service of the transferee, and when the conditions for renumeration under the newly applicable collective agreement have regard, inter alia, to length of service.’

( 12 ) Judgment of 14 September 2000, Collino and Chiappero, C‑343/98, EU:C:2000:441, paragraph 52. This is a consequence that follows from the fact that the Transfer of Undertakings Directive is a partial harmonisation measure. See Watson, P., EU Social Policy and Employment Law 2014, Oxford University Press, point 12.24, p. 141.

( 13 ) Judgment of 14 September 2000, Collino and Chiappero, C‑343/98, EU:C:2000:441, paragraph 52. See similarly judgment of 6 September 2011, Scattolon, C‑108/10, EU:C:2011:542, paragraph 77.

( 14 ) Ibid.

( 15 ) See judgment of 27 November 2008, Juuri, C‑396/07, EU:C:2008:656, paragraph 33. Given that, at the respective dates of transfer of the employees concerned both the transferors and the transferee were bound by identically worded provisions in collective agreements on length of service and calculation of termination of employment periods, there is no question in this case of Article 3 of the Transfer of Undertakings Directive being applied to ‘mere expectations to rights’ or to ‘hypothetical advantages flowing from future changes to collective agreements.’ See judgment of 9 March 2006, Werhof, C‑499/04, EU:C:2006:168, paragraph 29. Compare the situation considered by Advocate General Bot in his Opinion of 19 January 2017 in joined cases C-680/15 and C-681/15 Asklepios Kliniken EU:C:2017:30 (pending) particularly at point 94.

( 16 ) Judgment of 14 September 2000, Collino and Chiappero, C‑343/98, EU:C:2000:441, paragraph 52.

( 17 ) I note that an objective of Directive 2001/23 is to ensure a fair balance between the interests of the employees, on the one hand, and those of the transferee, on the other, and that this means that the transferee must be in a position to a make the adjustments and changes necessary to carry on its operations. See judgment of 11 September 2014, Österreichischer Gewerkschaftsbund, C‑328/13, EU:C:2014:2197, paragraph 29 and case-law cited. Given that there is no question arising in this case of, for example, the transferee being bound by clauses negotiated and agreed after the date of transfer without the transferee’s participation, the balance would appear to have been struck. Cf. judgment of 18 July 2013, Alemo-Herron and Others, C‑426/11, EU:C:2013:521, paragraphs 27 to 29.

( 18 ) Judgment of 6 September 2011, Scattolon, C‑108/10, EU:C:2011:542, paragraph 75 and case-law cited.

( 19 ) Article 3(3) of the Transfer of Undertakings Directive was brought into law by the amendment to Article 3 made in Council Directive 98/50/EC of 29 June 1998 amending Directive 77/187 (OJ 1998 L 201, p. 88).

( 20 ) Judgment of 6 September 2011, Scattolon, C‑108/10, EU:C:2011:542, paragraph 76.

( 21 ) The rule in Article 3(3) of the Transfer of Undertakings Directive maintaining the effects of a collective agreement binding a transferor is intended, in the interests of employees, ‘to avoid a sudden rupture of the standard framework of the agreement governing the employment relationship.’ See judgment of 11 September 2014, Österreichischer Gewerkschaftsbund, C‑328/13, EU:C:2014:2197, paragraph 28.

( 22 ) They rely on judgment of 15 January 2014, Association de médiation sociale, C‑176/12, EU:C:2014:2.

( 23 ) The obligation to interpret national law, in so far as possible, in conformity with directives applies to collective agreements as much as it does to other measures of national law. See the Opinion of Advocate General Szpunar in AKT, C‑533/13, EU:C:2014:2392, point 132 and the case-law cited.