Memorandum from the Commission on acquired rights of workers in cases of transfers of undertakings
Date: 1997-03-04
Institutions: European Commission
Subjects: application of EU law, case-law (EU), labour law, labour relations, transfer of businesses

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  04.03.1997 
COM(97) 85  final 

MEMORANDUM  FROM THE COMMISSION 

on acquired rights of workers in cases of transfers of undertakings 

MEMORANDUM  FROM  THE  COMMISSION 

on  acquired  rights  of workers  in cases of transfers  of  undertakings 

GUIDELINES  ON  THE  APPLICATION  OF  COUNCIL  DIRECTIVE 
77/187/EEC  OF  14  FEBRUARY  1977  BASED  ON  THE  CASE  LAW  OF  THE 
COURT  OF  JUSTICE  OF  THE  EUROPEAN  COMMUNITIES 

INTRODUCTION 

1 

SCOPE 

1.1  Which  countries? 
1.2  Which  undertakings? 
1.3  Which  employees? 
1.4  Which  operations? 

1.4.1  Fundamental  concept 
1.4.2  Change  of  employer 
transfers 
1.4.3  Successive 
1.4.4  Transfer  operations  associated  with  insolvency  proceedings 

2 

3 

4 

C O N S E Q U E N C ES  OF  TRANSFER 
2.1 
2.2 
2.3 
2.4 
2.5 

Transfer  of rights and obligations to the  transferee 
Transfer  of undertaking  and collective agreement  applicable 
Transfer  of undertaking  and changes in working conditions 
Non-entitlement to waive the  rights conferred  by the Directive 
Non-application of the Directive to benefits outside statutory social security 
schemes 
Protection  against  dismissal 
Protection  of the functions  of the employees'  representative 

2.6 
2.7 

INFORMATION  AN»  CONSULTATION 

CONCLUSION 

ANNEXES 

I - TWENTY QUESTIONS AND ANSWERS ON SAFEGUARDING  YOUR RIGHTS 

II  - JUDGMENTS  OF  THE  EUROPEAN  COURT  OF JUSTICE  AND THE  EFTA  COURT ON 
TRANSFERS  OF UNDERTAKINGS 

III  -CASES  PENDING  BEFORE  THE  EUROPEAN  COURT  OF  JUSTICE  AND  THE  EFTA 
COURT CONCERNING  TRANSFERS  OF UNDERTAKINGS 

IV - NATIONAL PROVISIONS TRANSPOSING DIRECTIVE  77/187/EEC OF 14 FEBRUARY 1977 

A 

GUIDELINES  ON THE APPLICATION  OF  COUNCIL  DIRECTIVE 
77/187/EEC  OF  14 FEBRUARY  1977 

INTRODUCTION 

According  to  the  preamble,  the  aim  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 
businesses1  (subsequently  referred  to as the  "Directive" or "Transfers Directive"), is "to 
provide  for  the  protection  of  employees  in  the  event  of  a  change  of  employer,  in 
particular  to  ensure  that  their  rights  are  safeguarded".  To  this  end,  the  Directive 
states that the transferor's rights and obligations  arising from  a contract  of  employment 
or from  an employment  relationship  are,  by  reason  of  such transfer,  transferred  to the 
transferee.  ït also provides for the protection of the workers concerned against dismissal 
by the transferor  or the transferee,  but does  not  stand  in  the way  of  "dismissals  that 
may  take  place for  economic, technical  or organizational  reasons entailing  changes 
in  the  workforce".  Furthermore,  in  accordance  with  Article  6  of  the  Directive,  the 
transferor  and  transferee  are  required  to  inform  and  consult  the  representatives  of  the 
employees affected  by a transfer. The essential objective of the Directive is thus to ensure 
that  the  restructuring  of  undertakings  within  the  European  Community  does  not  have 
adverse consequences  for the employees  of the undertaking concerned. 

Generally  speaking,  as far  as legislation  is  concerned,  the  effectiveness  in  social  terms 
of the protection  afforded  by the Directive  is beyond dispute.  The Directive  has proved 
to  be  an  invaluable  instrument  for  the  protection  of  workers  in  the  event  of  the 
reorganisation  of  an  undertaking,  by  ensuring  peaceful  and  consensual  economic  and 
technological  restructuring  and  providing  minimum  standards  for  promoting  fair 
competition  in the context  of  such changes. 

The  Commission,  in  paragraph  11.3.2  of  the  Medium-term  Social  Action  Programme 
(1995-1997),  decided to produce a memorandum  on acquired rights of workers in cases 
of transfers  of undertakings, with a view to increasing  information  and guidance on the 
application of Community law, taking into account the large number of cases which have 
come before  the Court of Justice of the European Communities. 

OJ  No L 61/27,  5.3.1977. 

O 

SUBJECT 

The  Commission  sees  this  Memorandum  as  a  useful  tool  for  a better  understanding  of 
Community  law in a very  complex area which  is not always easy to interpret. The main 
purpose of the  Memorandum  is make it easier for the public at large to understand 
in  the  light  of  the  criteria  established  by  the  European 
Directive  77/187/EEC 
Court  of  Justice.  Hence  the  objective  is  to  tell  European  citizens  how  Council 
Directive  77/187/EEC  has been  construed  by  the  European  Court  of Justice. It  satisfies 
the  requirement  that  Community  rules  should  be  transparent  by  facilitating  correct 
application  of European  law and serving as a guide for  representatives of employees and 
employers  on their  rights  and  obligations in  the  area of  transfers  of undertakings. 

SCOPE 

1.1  Which  countries? 

The Directive  applies  "where  and  insofar  as the undertaking,  business  or 
part of the business to be transferred  is situated within the territorial  scope 
of  the  Treaty"  (Article  1.2)  or  a  member  country  of  the  European 
Economic  Area  (Norway,  Iceland,  Liechtenstein). 

1.2  Which  undertakings? 

The Directive  applies to the transfer  of  any type of undertaking,  business 
or  part  of  a business, whether  public  or  private,  to  another  employer. 

The  fact  that  an undertaking  is engaged  in  non-profit-making  activities is 
not sufficient  to remove the undertaking from  the scope of the Directive2. 

Only transfers  involving sea-going vessels are specifically  excluded by the 
Directive. 

1.3  Which  employees? 

The  persons  the  Directive  aims  to  protect  are  persons  with  a contract  of 
employment  or  persons  in  an  employment  relationship  as defined  by  the 
employment  law  of the Member  States  at the time of  the  transfer. 

The Court feels that it is for the national  courts to establish to what extent 
the  persons  concerned  are  to  be  regarded  as  employees  and  that, 
consequently,  whether  or  not  an  employment  contract  or  employment 

CJEC,  8 June  1994, Commission  v  UK,  paragraph  45, ECR  1994,  6-2435. 

3 

relationship exists on the date of transfer must be established  on the basis 
of the provisions of  national  law3. 

The Directive  does  not apply  to the transfer  of rights and  obligations  in 
respect  of  persons  who  were  employed  by  the transferor  on  the  date  of 
transfer  but,  of  their  own  free  will,  do  not  continue  to  occupy  an 
employee's  post with the transferee4. 

1.4  Which  operations? 

~~  ' 

1.4.1  Fundamental concept 

First  of  all,  it  should  be noted  that the Court of  Justice of  the European 
Communities has ruled that the Directive applies to all transfers resulting 
from  a contract,  an administrative  or legislative  act,  or a court decision5. 

The Court has also held that the essential  criterion  for the recognition  of 
a transfer is whether the transferee has received an existing undertaking so 
as to be  able  to  continue  its  activities  or,  at least,  activities  of  the same 
type. It follows  that the decisive criterion for establishing whether there is 
a transfer for the purposes of  the Directive  is whether the economic unit 
retains  its  identity6.  The  assessments  necessary  in  order  to  establish 
whether or not there is a transfer in the sense indicated are a matter for the 
national  courts,  in view  of the specific  interpretation  factors  involved: 

- 
- 

- 

- 
- 

- 

type of undertaking or business, 
whether  or  not  tangible  assets  such  as  buildings  and  movable 
property  are transferred, 
the value of intangible assets at the time of transfer, 
whether  or not  the  majority  of  employees  are  taken  over  by the 
new employer, 
whether or not the customers are transferred, 
the degree of similarity between the activities carried on before and 
after  the transfer, 
the period,  if any, for which those activities were suspended. 

The Court  has held  that these  circumstances  are merely  single  factors in 
the  overall  assessment  which  must  be  made  and  cannot  therefore  be 
considered  in  isolation7.  In  its  opinion,  the  case  law  referred  to  above 
assumes  that  the  transfer  relates  to  a  solidly  organised  economic  unit, 

3 

4 

5 

7 

CJEC,  11 July  1995, Case  105/84, A/S Danmols Inventar,  ECR  1985, 2639  and  2654. 
CJEC,  7 February  1985, Case  19/83,  Wendclboe,  ECR  457. 
CJEC. 7 February  1985, Case  135/83, Abels, ECR  469. 
CJEC.  14 April  1994,  Case  C-392/92,  Schmidt. 
CJEC,  18 March  1986, Case  24/85,  Spijkcrs. 

whose  activities  are  not  limited  to  a  specific  task.  For  a transfer  of an 
undertaking to be covered by the Directive, it should involve the transfer 
of  an organised  set of  assets by means of  which  the  activities  or certain 
activities  of  the  transferor  undertaking  can  be  carried  on  in  a  solid 
manner8. 

1.4.2  Change  of employer 

The Court has ruled that the Directive  applies to  all  situations  in which 
there is a change in the legal or natural person responsible for carrying on 
the business9. As soon as the economic unit continues its activity, the mere 
fact  of  the  change  in the  natural  or legal  person  who  is  responsible  for 
carrying  on  the  business  is  sufficient  to  make the  Directive  applicable, 
regardless of whether or not ownership of the undertaking is transferred10. 

The transfer of ownership of most of the shares in a company or a change 
in  the  majority  shareholder  does  not  constitute  a  transfer  of  the 
undertaking,  as the employer's legal  personality  remains the same. 

1.4.3  Successive  transfers 

- 

The  owner  of  a  leased  undertaking  takes  over  its  operation 
following  a breach of the lease by the lessee: 

The Directive is applicable, its purpose being to ensure, as far as possible, 
that the rights of  employees  are safeguarded  in the event of  a change of 
employer  by  enabling  them  to  remain  in  employment  with  the  new 
employer on the terms and conditions agreed with the transferor11. 

At  the  end  of  a  non-transferable  lease,  the  owner  of  the 
undertaking transfers the undertaking to a new lessee who carries 
on the business without  interruption, with  the  same staff  as were 
dismissed on expiry  of the first lease: 

The Directive is  applicable where,  on expiry  of  a non-transferable  lease, 
the  lessee  ceases  to  be  the  employer  and  a  third  party  becomes  the 
employer under a new lease concluded with the owner. The fact that the 
transfer  is  affected  in  two  stages  does  not  prevent  the  Directive  from 
applying, provided that the economic unit in question retains its identity. 
This is so in particular when the business is carried on without interruption 

9 

10 

11 

CJEC,  19 September  1995, Case  C-48/94, Rygaard. 
CJEC,  15 June  1988, Case  101/87, Boric International. 
CJEC,  10 February,  Case 324/86, Daddy's Dance Hall. 
CJEC,  17 December  1987, Case 287/86, Ny Molle Kro. 

by  the new lessee,  with the same staff  as were employed  in the business 
before  the transfer12. 

1.4.4  Transfer operations associated with insolvency proceedings 

According  to  the  Court of  Justice the Directive  does  not impose  on the 
Member  States  the  obligation  to  extend  the  rules  laid  down  therein  to 
transfers taking place in the context of  insolvency  proceedings instituted 
with  a  view  to  the liquidation  of  the  assets  of  the  transferor,  without 
prejudice to the national  legislator's right to decide otherwise13. 

The Court has also ruled that the Directive does not apply to transfers of 
undertakings  made  as  part  of  a creditor's  arrangement  procedure .of the 
kind  provided for in the Italian  legislation  on compulsory  administrative 
liquidation  but  that  it  does  apply  when,  in  accordance  with  a  body  of 
legislation  such  as  that  governing  special  administration  for  large 
undertakings  in  critical  difficulties, 
it  has  been  decided  that  the 
undertaking is to continue trading for as long as that decision  remains in 
force14. 

By  contrast,  the  Directive  does  apply  to  the transfer  of  an undertaking, 
business  or  part  of  a  business  to  another  employer  in  the  context  of 
proceedings of the type "surséance van betaling" (suspension of payments) 
under Netherlands law, as such proceedings may allow the continuation of 
business. 

The fact that the transfer of an undertaking, business or part of a business 
takes  place  after  the  suspension  of  payments by  the transferor  is  not in 
itself sufficient to exclude such transfers from the scope of the Directive15. 
Furthermore,  the  Directive  applies  to  undertakings  in  which  a  state  of 
crisis has been recognised, as the procedure leading to identification  of this 
state tends to favour the maintaining of the undertaking's  activity  with a 
view to a subsequent takeover16. 

12 
13 

14 
15 
16 

CJEC,  10 February  1988, Case  324/86, Daddy's Dance Hall. 
CJEC, 7 Febniaiy  1985, Case  135/83, Abels; CJEC, 7 Febniaiy  1985, Case  179/83 FNC; CJEC, 
7 Febniaiy  1985, Case  186/83, Botzen;  CJEC, 25 July  1991, Case  362/89, dTJrso. 
CJEC, 25 July  1991, Case  C-362/89,  d'Urso. 
CJEC,  11 July  1985, Case  105/84, Mikkelson. 
CJEC, 7 December  1985, Case 472/93, Spano. 

CONSEQUENCES  OF  TRANSFER 

2.1 

Transfer  of  rights  and  obligations  to  the  transferee 

In accordance with Article 3.1  of the Directive, the transferor's rights and 
obligations arising from  a contract of employment or from  an employment 
relationship  existing  on  the  date  of  a  transfer  are,  by  reason  of  such 
transfer,  transferred  to  the  transferee.  However,  Member  States  may 
provide that after  the date of transfer  the transferor  continues to be liable, 
side by  side  with  the transferee,  in  respect  of  obligations  arising  from  a 
contract  of  employment  or an  employment  relationship. 

Thus,  the  transferee  is bound  by  all  the transferor's  obligations  resulting 
from  an  employment  contract  or  an  employment  relationship,  including 
those  which  arose  before  the  date  of  transfer.  In  the  Court's  view,  the 
Directive  refers  unreservedly  to  the  transferor's  rights  and  obligations 
arising from  a contract of employment or from  an employment relationship 
existing  on  the date of transfer.  It is the transferee  who  assumes liability 
for  bearing  the  burdens  resulting  from  employees'  rights  existing  at  the 
time of transfer17.  The objective of the Directive is to safeguard  the rights 
of employees in the event of a change of employer by  making it possible 
for  them to continue to work for the transferee  under the same conditions 
as those agreed with the transferor.  Its purpose is not, however, to ensure 
that the contract with the transferor  is continued  where an employee does 
not wish  to remain  in the transferee's  employ18. 

2.2 

Transfer  of  undertaking  and  collective  agreement  applicable 

Article 3.2  of the Directive requires the transferee  to continue to  observe 
the terms and  conditions  agreed  in any  collective  agreement  on the same 
terms  applicable to the transferor,  until  the date  of termination  or  expiry 
of the collective agreement or the entry into force or application of another 
collective  agreement. 

In  the  Court's  view,  Article  3.2  of  the  Directive  must  be  interpreted  as 
obliging  the  transferee  to  continue  to  observe  the  terms  and  conditions 
agreed in any collective agreement in respect of workers who were already 
employed by  the undertaking at the time of transfer,  thus excluding those 
who were recruited  subsequent  to that date19. 

The transferee  has to continue to observe the terms and conditions agreed 
in  any  collective  agreement  on  the  same  terms,  until  the  date  of 

17 
18 
19 

CJEC, 7 February  1985, Case  135/83, Abels. 
CJEC, 5 May  1988, Cases  144/87 and  154/87, Berg and Busschers. 
CJEC,  17 December  1987, Case  287/86, Ny Molle Kro. 

termination  or expiry of the collective agreement or the entry  nto force or 
application  of  another  agreement.  In  accordance  with  Article  3.2  of  the 
Directive, Member States may limit this period, provided it is not less than 
one year20. 

2.3 

Transfer  of  undertaking  and  changes  in working  conditions 

If the contract of employment or the employment relationship is terminated 
because  the  transfer  within  the  meaning  of  the  Directive  involves  a 
substantial change in working conditions to the detriment of the employee, 
the employer is regarded as having been responsible for termination of the 
employment  contract  or employment  relationship  (Article 4.2). 

Employees' remuneration rights arising from  their employment contract or 
employment  relationship  may  not be  changed  even  if the overall  amount 
of  their  wages  remains  unchanged.  However,  in  so  far  as  national  law 
makes it possible to amend an employment relationship in a way which is 
disadvantageous  to  employees,  such  changes  are  not  ruled  out  merely 
because the undertaking  has in  the meantime  been  transferred.  Thus,  the 
rights and  obligations  may  be  changed  vis-à-vis  the transferee  subject  to 
the  same  restrictions  as  could  have  been  applied  to  the  transferor, 
assuming  that the transfer  in  itself is not the reason  for  this change21. 

2.4 

Non-entitlement  to waive  the  rights  conferred  by  the  Directive 

The  Court  of  Justice  has  held  that  the  protection  conferred  by  the 
mandatory  provisions of the Directive is a matter  of public policy.  It has 
ruled very clearly that an employee cannot waive the rights conferred upon 
him  by the Directive and  that these rights cannot be restricted,  even with 
his  consent  and  even  if  the  disadvantages  resulting  from  his  waiver  are 
offset  by such benefits  that, taking the matter as a whole, he is not placed 
in  a worse  position22. 

As the Court has specified,  the Directive's rules apply to all, including the 
employees'  representatives,  who  may  not agree different  arrangements  in 
an agreement  with  the transferor  or the  transferee. 

According to the Court,  it is not permissible to derogate from  the rules in 
a  manner  unfavourable  for  the  employees  and  hence the  implementation 
of  the  rights  conferred  on  employees  may  not  be  made  subject  to  the 
consent  of  either  the  transferor  or  the  transferee  nor  the  consent  of  the 
employees'  representatives  or  the  employees  themselves,  with  the  sole 

20 
21 
22 

CJEC,  11 December  1992, Case  209/91, Rask  and  Christensen. 
CJEC,  11 December  1992, Case  209/91, Rask  and  Christensen. 
CJEC,  10 Febniaiy  1988, Case  324/86, Daddy's Dance Hall. 

8 

reservation,  as regards the workers themselves, that,  following  a decision 
freely  taken by them, they are at liberty, after  the transfer,  not to continue 
the  employment  relationship  with  the new  employer23.  In  this  event  it  is 
for  the  Member  States  to  determine  what  the  fate  of  the  employment 
contract or employment relationship should be. Notably, they may provide 
in  such  circumstances  that  the  contract  must  be  regarded  as  terminated 
either by the employee or by the employer. They may also provide that the 
contract  be  maintained  with  the  transferor24. 

2.5 

Non-application  of  the  Directive  to  benefits  outside  statutory  social 
security  schemes 

The  transfer  of  rights  and  obligations  arising  from  a  contract  of 
employment  or  an  employment  relationship  does  not  cover  employees' 
rights  to  old-age,  invalidity  or  survivor's  benefits  under  supplementary 
company  or  inter-company  pension  schemes  outside  the  statutory  social 
security  schemes  in Member  States (Article  3.3, first  paragraph). 

Thus  there  is  no  transfer  of  the  transferor's  obligations  based  on  non 
statutory  schemes.  Nevertheless, 
the  adverse 
consequences  for  employees  which  could  result  from  this  exclusion, 
Member  States must adopt the measures necessary  to protect the interests 
of employees and  persons no longer employed  in the transferor's  business 
at the time  of transfer  (Article  3.3, second  paragraph). 

to  avoid 

in  order 

2.6 

Protection  against  dismissal 

The transfer  of an undertaking, business or part  of a business does  not in 
itself  constitute  grounds  for  dismissal  by  the  transferor  or  the 
transferee  (Article  4.1),  but  this  provision  does  not  stand  in  the  way 
of  dismissals  that  may  take  place  for  economic,  technical  or 
organisational  reasons  entailing  changes  in  the  workforce. 

Thus  the  Directive  is  limited  to  prohibiting  dismissals  where  the  only 
reason  is the  transfer. 

The  Court  has  held  that  the  protection  afforded  by  the  Directive  against 
dismissal  applies  to  any  situation  in  which  employees  affected  by  a 
transfer  enjoy  some,  albeit  limited,  protection  against  dismissal  under 
national  law,  with  the  result  that  such  protection  may  not be  taken  away 
from  them  or  curtailed  solely  because  of the  transfer25. 

23 
24 
25 

CJEC  25 July  1991, Case  362/89,  d'Urso. 
CJEC  16 December  1992, Case  132/91,  Katsikas, ECR  92, I 6577. 
CJEC,  15 April  1986, Case  237/84, Commission  v  Belgium. 

However,  in the case of dismissals the Directive's scope may be curtailed 
by the right, recognised  in the Member States, of withdrawing protection 
from  "certain specific categories of employees who are not covered by the 
laws  or  practice  of  the  Member  States  in  respect  of  protection  against 
dismissal"26. 

2.7 

Protection  of the functions  of  the  employees'  representative 

Article  5  of  the  Directive  aims  to  ensure  continuity  of  the  function  of 
representation  and  protection  of  the  persons  concerned.  As  regards 
continuity  of  the  function  of  representation  (Article  5(1)),  it  should  be 
borne in mind that if the business transferred  preserves its autonomy,  i.e. 
continues to exist  as a separate operating unit rather than being absorbed 
by a more complex structure, the status and function of the representatives 
or representation  of the employees  affected  by the transfer,  as laid down 
by the  national  law  of  the Member  States,  must be  preserved. However, 
this  does  not  apply,  if  in  accordance  with  national  legislation  the 
the  employees' 
for 
conditions  necessary 
representatives  are  fulfilled. 

the  re-appointment  of 

The representatives of the employees affected by a transfer whose term of 
office  expires as a result of the transfer  "continue to enjoy the protection 
provided by the laws, regulations, administrative provisions or practice of 
the Member  States" (Article  5.2). 

INFORMATION  AND CONSULTATION 

The transferor  and transferee  are required  to  inform  the representatives  of their 
respective  employees  affected  by  a transfer  of the following  (Article 6.1): 

- 

- 

the reasons for the transfer, 
the legal,  economic  and social  implications of  the transfer for the 
employees, 
measures envisaged  in  relation  to the employees. 

This information  must be provided in good time before the transfer is carried out, 
and  in  any  event  before  the  transferee's  employees  are  directly  affected  by  the 
transfer as regards their conditions  of work  and employment. 

Whereas  the  obligation  to  provide  information  is  general,  the  consultation 
obligation  is  limited.  This  obligation  exists  when  the  transferor  or  transferee 
envisages measures in  relation to his employees  (Article 6.2),  e.g.  a reduction in 

Article  4(1),  semence  2, of  Council  Dircclivc  77/187/EEC  of  14 Fcbniary  1977. 

10 

the  size  of  the  workforce.  Consultation  takes  place  "with  a  view  to  seeking 
agreement".  The Court of Justice has interpreted  a similar provision in Directive 
75/129/EEC (collective redundancies) as not creating an obligation with regard to 
results27.  This  consultation  must  be  made  "in good  time"  with  the  employees' 
representatives. 

According  to  the  Court,  the  Directive  was  not  intended  to  bring  about  global 
harmonisation  of  the  national  systems  of  employee  representation  in  the  firm. 
However,  the  limited  nature  of  such  harmonisation  should  not  frustrate  the 
purpose  of  Article  6  of  the  Directive.  Notably,  it  should 'not  absolve  Member 
States from  their obligation  to take all  the necessary  measures to ensure that the 
employees' representatives may be designated with a view to the information and 
consultation  provided  for  in  the  Article  in  question.  This  being  the  case  the 
Directive  leaves  it  to  the  Member  States  to  determine  the  arrangements  for 
designating  the employees' representatives28. 

Member  States  may  limit  the  obligations  referred  to  above  to  undertakings  or 
businesses which, in respect of the  number of employees, fulfil  the conditions for 
the election or designation of a collégial body representing the employees (Article 
6.4). 

They  may also provide that, where there are no representatives of the employees 
in  an  undertaking  or  business,  the  employees  concerned  must  be  informed  in 
advance when  a transfer  is about to take place (Article 6.5). 

It must be emphasised that national  law must provide for effective,  proportionate 
and  dissuasive  sanctions  in  the  event  of  the  employer's  failure  to  inform  and 
consult the employee  representatives29. 

CONCLUSION 

The Transfers Directive has formed the basis for a large number of cases brought 
before the Court of Justice of the European Communities. A total of 25 judgments 
have  been  handed  down,  most  of  them  in  connection  with  references  for 
preliminary rulings (see Annex II). At the moment there are several cases pending 
before the Court (see  Annex III). 

In its judgments, the Court has in particular clarified the concept of transfer, ruled 
that a contractual  link  is not necessary  between  the transferor  and transferee  for 
the  Directive  to  apply,  excluded  from  the  scope  of  the  Directive  liquidation 
proceedings but not suspension  of payment proceedings, clarified  the meaning of 

27 

28 

2») 

CJEC  12 February  1985, Case  284/83,  ECR,  p. 553. 
CJEC,  8  June  1984,  Case  382/92,  Commission  v  UK. 
CJKC, 8 June  1984, Case  382/92, Commission  v UK. 

the  term  "employee",  and ruled  that employees  and their  representatives cannot 
waive the rights conferred  on them by the Directive as implemented by national 
legislation. 

12 

ANNEX  I 

TWENTY  QUESTIONS  AND  ANSWERS  ON  SAFEGUARDING  YOUR 
RIGHTS 

A  GUIDE FOR EMPLOYEES' AND EMPLOYERS1 
REPRESENTATIVES  CONCERNING  THEIR RIGHTS  AND 
OBLIGATIONS  IN THE FIELD  OF TRANSFERS  OF  UNDERTAKINGS 

1) Does the Directive also apply to the transfer of an undertaking situated in the 
territory of a country which is  not a Member State  of the European Union? 

-  The  Directive  applies  to  the  extent  that  the  undertaking  to  be  transferred  is 
within  the territorial  scope of  the  Treaty  on  European  Union  or a Member  State 
of the European  Economic  Area  (Norway,  Iceland,  Liechtenstein). 

1) For  the Directive to be applicable, must the undertaking exercise its activity 
with a  view to  making a  profit? 

-  The  fact  that  an  undertaking  is  engaged  in  non-profit-making  activities  is  not 
sufficient  to remove the undertaking  from  the  scope of the Directive. 

3)  Which operations are excluded from  the scope of the Directive? 

-  The  Directive  specifically  excludes  operations  involving  sea-going  vessels. 
However, France, Germany, Italy, Portugal  and  Spain have applied the principles 
of  the Directive to  sea-going vessels. 

4)  Who is covered by the Directive? 

- Anyone with a contract of employment or in an employment relationship on the 
date  of  a  transfer. 
Public  service employees are not  covered  by the directive insofar  as they  are not 
subject  to the labour  law in  force  in  the Member  States. 

5)  Who  decides  whether  a  person  has  a  contract  of  employment  or  is  an 
employment relationship  on the  date  of a transfer 

-  This  question  is  subject  to  the  jurisdiction  of  each  Member  State  and  the 
provisions  of  national  law. 

6) Does the Directive apply to employees  who have left the undertaking by the 
date of transfer? 

-  No, the  provisions  of  the  directive  cover  only  employees  in  the  service  of  the 
undertaking  on the  date  of  transfer. 

13 

7) After a transfer, who is responsible for  existing obligations, the transferor or 
the transferee? 

- The transferee is liable for all the transferor's obligations, including those arising 
prior to the date of transfer. 
Except where national legislation provides for joint liability of the transferor and 
transferee  after  the  transfer,  the  consequence  of  the  transfer  is  to  release  the 
transferor from  his obligations. 

Joint  responsibility  has  been  adopted  by  France,  Germany,  Greece,  Italy,  the 
Netherlands,  Portugal  and Spain. 

8) Where an undertaking is transferred, which collective agreement applies, the 
transferor's  or the transferee's? 

-  The  Directive  requires  the  transferee  to  continue  to  observe  the  terms  and 
conditions  of  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  of another collective agreement. 

However,  Member  States  may limit this period,  provided  it is not less than one 
year. 

9)  May  conditions  of  employment  be  changed following  the  transfer  of  an 
undertaking? 

- The rights of employees arising from  a contract of employment or employment 
relationship  may  not  be changed because of a transfer. 

However,  rights and obligations may be changed vis-à-vis  the transferee  subject 
to the same restrictions as applied to the transferor,  provided that the transfer in 
itself is not the reason for the change. 

10) May  employees waive the rights  accorded by the Directive? 

-  No.  Employees  may  not waive  the  rights conferred  on them  by the Directive, 
and  those  rights  may  not  be  restricted  even  with  their  consent  and  even  if  the 
disadvantages  resulting  from  the waiver  are offset  by  similar benefits. 

11) Does  the protection  given  by  the  Directive  apply  to  benefits  under  non 
statutory  social security schemes? 

- No. The transfer  of rights and  obligations  arising from  an employment contract 
or employment relationship does not cover employees' rights to old-age, invalidity 
or  survivor's  benefits  under  supplementary  company  or  inter-company  pension 
schemes outside the statutory social security  schemes in Member States. However, 
Member  States  must  adopt  the  measures  necessary  to  protect  the rights acquired 

14 

or being acquired by employees and persons no longer employed  in the business 
at the time of transfer. 

12) May dismissals for  economic, technical or organisational reasons take place 
on the transfer of an undertaking? 

-  Yes. The Directive is limited to prohibiting dismissals where the only reason is 
the transfer. 

13)  What  are  the  rights  of  the  representatives  of  employees  affected  by  a 
transfer whose term of office expires as a result  of the transfer? 

-  They  continue  to  enjoy  the  protection  provided  by  the  laws,  regulations, 
administrative  provisions or practice of the Member States. 

14) What are the transferor's and transferee's obligations as regards providing 
information for  the representatives of their respective workers? 

-  They  must provide information  on the following  points: 

-  the reasons for the transfer, 
-  the legal,  economic  and social  implications of the transfer for the employees, 
-  measures envisaged  in relation to the employees. 

15) Is it compulsory to consult the employees' representatives in the event of the 
transfer of an undertaking? 

-  Such  an obligation  exists  if  the transferor  or transferee  envisages  measures in 
relation  to  their  respective  employees,  e.g.  a  reduction  in  the  size  of  the 
workforce. 

16) At  which point  in time must they be informed  and consulted? 

- The employees' representatives must be informed  and consulted  "in good time" 
and  in  any  event  before  the  transferee's  employees  are directly  affected  by  the 
transfer as regards their conditions  of work  and employment. 

17) Are there any derogations from  the principles  of informing and consulting 
employees ' representatives? 

-  Yes.  Member  States may  limit  these obligations  to undertakings or businesses 
which, in respect of the number of employees, fulfil  the conditions for the election 
or designation  of  a collégial  body  representing the employees. 

18)  Does  the  Directive  require  Member  States  to  provide  for  systems  of 
employee  representation  even  if  there  is  no  such  representation  in  the 
undertaking  under  national  law? 

15 

Yes.  Member  States  must  adopt  all  necessary  measures  for  designating  the 
employees'  representatives  who  have  to  be  informed  and  consulted  pursuant to 
Article  6  of  the  Directive.  It  is  for  the  Member  States  to  determine  the 
arrangements for designating the employees' representatives. 

19)  Are  the  obligations  to  inform  and  consult  employees'  representatives 
binding? 

- National law must provide for effective  sanctions in the event of the employer's 
failure to inform  and consult employees' representatives. 

20) Is  the protection  accorded by the Directive the upper  limit? 

-  No.  The  Directive  does  not  affect  the  right  of  Member  States  to  apply  or 
introduce laws, regulations or administrative provisions which are more favourable 
to employees. 

16 

ANNEX  II 

JUDGMENTS  OF  THE  COURT  OF  JUSTICE  OF  THE  EUROPEAN 
COMMUNITIES AND THE EFTA  COURT RELATING TO TRANSFERS 
OF  UNDERTAKINGS  -  COUNCIL  DIRECTIVE  77/187/EEC  OF  14 
FEBRUARY  1977 

Wendelboe,  Case  19/83,  7 February  1985, ECR  1985, p. 457 
Abels,  Case  135/83, 7 February  1985, ECR  1985, p. 479 
Industriebond  FNV, Case  179/83 7 February  1985, ECR  1985, pp. 511 and 517 
Botzen,  Case  186/83, 7 February  1985, ECR  1985, pp. 520 and 523 
A7S Danmols Inventar, Case  105/84  11 July  1985, ECR 1985, pp. 2639 and 2654 
Republic  of Italy,  Case 235/84  10 July  1986, ECR  1986, pp. 2291 and 2304 
Kingdom  of Belgium, Case 237/84,  15 April  1986, ECR 1986, pp. 1247 and 1257 
Spijkers,  Case  24/85,  18 March  1986, ECR  1986, pp.  1119 and 1130 
Ny  M0lle  Kro, Case 287/86,  17 December  1987, ECR  1987, p. 5465 
Daddy's  Dance  Hall,  Case 324/86,  10 February  1988, ECR  1988, p. 739 
Bork,  Case  101/87,  15 June  1988, ECR  1988, p. 3057 
Berg  and Busschers,  Cases  144 and  145/87, 5 May  1988, ECR 1988, p. 2559 
D'Urso,  Case 362/89, 25 July  1991, CJEC,91, 1-4105 
Redmond  Stichting,  Case 29/91,  19 May  1992, CJEC  92, 1-3189 
Anne Watsen,  Case  209/91,  12 November  1992, CJEC  92, 1-5755 
Schmidt,  Case  392/92,  14 April  1994, CJEC  94, 1-1311. 
Commission  v United  Kingdom,  Case  382/92,  8 June  1994, CJEC 94, 1-2435 
Rygaard,  Case 48/94,  19 September  1995. 
Luigi  Spano,  Case 472/93,  7 December 1995. 
Merckx  et Neuhuys,  Cases  171/94 and  172/94,  7 March  1996. 
Eilert Eidesund v Stavanger Catering A.s., Case E - 2/95.  Judgment of the EFTA 
Court  of 25 September 1996. 
Torgier  Langeland  v Norske Falnicorn  A.S., Case E-3/95. 
Judgment  of the EFTA  Court of 25  September 1996. 
Annette  Henke  v  Gemeinde  Schierke  and  Verwaltungsgemeinschat  "Brocken".-
Case C-298/94,  15.10.96. 
Claude  Rotsart  de Hertains v.  S.A. J. Benoit  in receivership  and I.G.C.  Housing 
Service  Case C - 305/94,  14.11.96. 

17 

ANNEX  HI 

CASES  PENDING  BEFORE  THE  COURT  OF  JUSTICE  OF  THE 
EUROPEAN  COMMUNITIES  AND  THE  EFTA  COURT  RELATING  TO 
COUNCIL  DIRECTIVE  77/187/EEC OF  14 FEBRUARY  1977 

-  Case  C-319/94,  Jules  Dethier  Equipment  v  Jules  Dassy,  Sprl  Sovam  in 
receivership. 
-  Case C-13/95,  Ayse  Siizen  v  Zehnacker  Gebandereinigung  Gmbh. 
-  Case C-229/95,  Simone Moll  v Berhane  Mesghena. 
-  Case  C-336/95,  Pedro Burdalo v Fondo de  Garantia  Salarial. 
-  Case E-2/95, Eilert  Eidesund  v  Stavanger  Catering A.S. 
-  Case E-3/95, Torgeir  Langeband  v Norske Falnicorn  A.S. 
-  Case C-336/95  Pedro Burdalo v Fondo de  Garantia  Salarial. 
-  Case E-2/96  J.  Ulstein  & P.Otto Raiseng v  A. Meller. 
-  Case E-3/96  Tor  A.Ask  v ABB  AS and  AKER AS. 
-  Case C-121/96  Sultan  Bulut v Deutsche  Bundespost. 
-  Case  C-127/96  Prudencia  Gomez  Perez  v  Contrtas  y  Limpiensas  S.L.  and  F. 
Hernandez  Vidal  S.A. 
- Case C-173/96 Francisco Hidalgo v Asociaciôn de Servicios ASER and Sociedad 
Cooperativa Minerva. 
-  Case C-204/96  E.f.  Liebelt  GmbH v Marianne  Seidel. 
-  Case C-229/96  F.  Santner  v Hoechts  A.g. 
-  Case  C-247/96  H.  Ziemann  v  Fa Ziemann  Sicherheit  GmbH  and  Fa  H.  Bohn 
Sicherheitsdienst. 
-  Case  C-277/96  H.  J.Dick  v EB -  Schulungs  GmbH  i.L. 

ANNEX  IV 

NATIONAL  PROVISIONS  TRANSPOSING  DIRECTIVE  77/187/EEC  OF 
14  FEBRUARY  1977 

National  provisions  communicated  by  the  Member  States  with  reference  to 
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: 

Austria 

Arbeitsvertragsrechts-Anpassungsgesetz-Avrag,BGBlNr459/1993 

Belgium 

: 

Arrêté  Royal  du  19/04/78, Moniteur  Belge  du  25/08/78 
Arrêté  Royal  du  31/10/78,  Moniteur  Belge  du  31/10/78 
Convention  collective  n*32  bis  du  7  juin  1985  modifiée  par  la 

Convention 

n*32ter  du  2  décembre  1986. 

Denmark 

: 

Lov  af  21/03/79,  Lovtidende  à NR.11  AF  21/03/79  p.  326 

Finland 

: 

Act on contracts of Employment  320/70 as amended  by Act 235/93 
Act  on  Co-determination  in  Companies  725/78  as amended  by  Act 
236/93 

France 

: 

Code  du  Travail  (Art.  122-12,  122-12.1,  132-8,  412-16,  412-18) 
Circulaire  n*27/75  du  02/07/75 
Arrêté  Ministériel  du  27/03/62 
Accord  Convention  Collective National  Retraite Prévoyance  Cadres 
du  14/03/47 
Loi  n"82-915;  Journal  Officiel  du  29/10/82 
Loi  n'83-528,  Journal  Officiel  du  29/06/83 

Germany: 

Gesetz  vom  25/08/69,  Bundesgesetzblatt  (Teile  I,  II,  III)  I, Nr.  83 
vom  27/08/69  p.  1317 
Gesetz  vom  15/01/72,  Bundesgesetzblatt  (Teile  I,  II,  III)  I  Nr.  48 
vom  20/08/80  p.  1308 

Grand  Duchy  of  Luxembourg 

: Règlement  Grand-Ducal  du  19/06/70,  Memorial 

A  n'35  du  30/06/70. 
Loi  du  24/06/70,  Memorial  A  n*35  du  30/06/70 
Règlement  Grand  Ducal  du  27/06/70,  Memorial  A  n*35  du 
30/06/70. 
Loi  du  12/11/71.  Loi  du  18/03/81,  Memorial  A  n°  16  du 
26/03/81. 

Greece  : 

Presidential  Decree No  572 of 01/12/88, FEK  AN.  269  of  06/12/88 
p.  4099 

19 

Ireland  : 

EC.  Safeguarding  of  Employees  on  Transfer  of  Undertaking, 
Statutory  Instruments  n*306 of  10/10/1980 

Italy  : 

Code  Civile (Art.2112) 
Legge N-675  del  12/08/77, Gazetta  Ufficiale 
le n.  243  del  07/09/77  p.  6257 
Legge N.215 del  26/05/78, Gazetta Ufficiale  N.  145 del  07/05/78 
P.38.03 
Legge N.428  del  29 dicembre  1990, Gazetta Ufficiale  n*10 del 
12/01/1991 

Netherlands  : Wet van  15/07/79,  Staatsblad  nr  1979/448  van  31/08/79. 

Ministeriele Verordening van 30/01/81,  Staatsblad nr.  1981/18 van 
15/02/81. 
Wet  van  15/05/81,  Staatsblad  nr.  1981/400 van  07/07/81. 
Wet  van  22/05/81,  Staatsblad  Nr  1981/416  van  14/07/81. 

Portugal  :  Decreto  - Lei  N  49/408, 24/11/69 
Decreto-Lei  N'519C/79,  29/12/79 
Lei  n'46/79,  12/09/79 
Lei  n'68/79,  09/10/79 

Spain  : 

Sweden  : 

Ley N. 8/80  de  10/03/80, (Boletin  Oficial  del Estado de  14/03/80). 
Decreto N.  2065/74  de  30/05/74,  (Boletin  Oficial  del  Estado  de 
30/07/80). 

Act.  1982/80  on  Security  of  Employment,  section  4,7  and  25-27 
Act. 1976/58 on Co-Determination at Work, section 6,  10-22 and 28 
Annual  Leave  Act.  1977/480,  section  31 
Act  1974/358 on  the Position  of  a Trade-Union  Representative  at 
the Work  Place 
Act  1967/531 on  Safeguarding  Pension  Commitments. 

United Kingdom  : Regulations  1981,  Statutory  Instruments n" 1794 of  14/12/81. 

Trade Union  Reform  and  Employment  Rights  Act,  1993 
Terms  and  conditions  of  employment.  Regulations,  1995 -  N# 
2587. 

20 

ISSN 0254-1475 

COM(97) 85  final 

DOCUMENTS 

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04  05  06  08 

Catalogue number  :  CB-CO-97-077-EN-C 

ISBN 92-78-16351-1 

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