WRITTEN QUESTION P-2200/02

by Richard Howitt (PSE) to the Commission

(12 July 2002)

Subject: TUPE loophole exploited by the German mobile phone company T-Mobile in Borehamwood, UK

Following the takeover of the British mobile phone company One 2 One by the German company Deutsche Telekom, T-Mobile, the new name for One 2 One, has conducted an internal transfer of staff at its UK Headquarters in Borehamwood. As a direct result, staff will see a major change in their pension scheme and face the prospect of losing 40 % of their retirement income. T-Mobile argues that TUPE (Transfer of Undertakings, Protection of Employment) does not come into play, since the transfer is internal and not to a different entity. I should like to question the validity of the transfer under European law in relation to the status of workers' pension schemes. Does this not constitute a loophole in TUPE?

Answer given by Mrs Diamantopoulou on behalf of the Commission

(19 August 2002)

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(1) applies, according to Article 1, paragraph 1, point a) thereof, to any transfer of an undertaking, business, or part of an undertaking or business to another employer as a result of a legal transfer or merger. The Court of Justice held, in case C-234/98(2), that the Directive can apply to a transfer between two companies in the same group.

The Directive applies where there is a transfer of an economic entity which retains its identity, meaning an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary. The Commission is not in a position to assess whether the Directive is applicable in this case.

Finally, Article 3, paragraph 4 point a), states that, unless Member States provide otherwise, the safeguarding of employees' rights, as defined in paragraph 1 and 3 of the same Article, does not apply in relation to employees' rights to old-age, invalidity or survivors' benefits under supplementary company or inter-company pension schemes outside the statutory social security schemes in Member States(3).

As far as the Commission is aware, the Directive has been correctly transposed in the United Kingdom. In the first instance, therefore, it is the responsibility of the national courts to resolve any issues arising from or relating to incorrect implementation by the national authorities.

(1) OJ L 82, 22.3.2001.

(2) Case C-234/98, G. C. Allen and Others v. Amalgamated Construction Co. Ltd, ECR 1999, p. I-8643.

(3) Article 3, paragraph 1, lays down that 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. According to paragraph 3 of the same Article, the transferee shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under the agreement.