Giuseppe d'Urso, Adriana Ventadori and others v Ercole Marelli Elettromeccanica Generale SpA and others.
Date: 1991-07-25
9 As this Court held in its judgment in Joined Cases 144/87 and 145/87 Harry Berg and Another v Ivo Marten Besselsen [1988] ECR 2559, paragraphs 12 and 13, the 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. The rules applicable in the event of a transfer of an undertaking or a business to another employer are thus intended to safeguard, in the interests of the employees, the existing employment relationships which form part of the economic entity transferred.
10 It also follows from the Court' s case-law (judgment in Case 186/83 Arie Botzen and Others v Rotterdamsche Droogdok Maatschappij B.V. [1985] ECR 519, paragraph 16) that Article 3(1) of the Directive covers the transferor' s rights and obligations arising from a contract of employment or an employment relationship existing on the date of the transfer and entered into with employees who, in order to carry out their duties, were assigned to the part of the undertaking or business transferred.
11 The Court also held, in Case 324/86 Foreningen af Arbejdsledere i Danmark v Daddy' s Dance Hall A/S [1988] ECR 739, at paragraph 14, that the rules of the Directive had to be considered to be mandatory, so that it was not possible to derogate from them in a manner unfavourable to employees. The implementation of the rights conferred on employees by the Directive may not therefore 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 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 employer (judgment in Case 105/84 Foreningen af Arbejdsledere i Danmark v Danmols Inventar A/S, in liquidation [1985] ECR 2639, paragraph 16).
12 It follows that in the event of the transfer of an undertaking, the contract of employment or employment relationship between the staff employed by the undertaking transferred may not be maintained with the transferor and is automatically continued with the transferee: the question whether or not a contract or relationship of employment exists at the date of the transfer must, however, be assessed on the basis of national law (judgment in Case 101/87 P. Bork International A.S, in liquidation, and Others v Foreningen af Arbejdsledere i Danmark [1988] ECR 3057, paragraph 17).
18 Thirdly, it is argued that an interpretation of the Directive having the effect of preventing surplus employees of the undertaking from being maintained in the transferor' s service could be less favourable to those employees either because a potential transferee might be dissuaded from acquiring the undertaking if he must retain the surplus personnel of the undertaking transferred or because the surplus personnel are dismissed and thus lose the advantages which they might have derived from the continuance of their employment relationships with the transferor.
19 In reply to that argument it must be pointed out that, although Article 4(1) of the Directive does state that the transfer is not in itself to constitute grounds for dismissal by the transferor or the transferee, it goes on to provide that this provision is not to "stand in the way of dismissals that may take place for economic, technical or organizational reasons entailing changes in the workforce". It must be added that if, in order as far as possible to prevent dismissals, national legislation lays down in favour of the transferor provisions allowing the burdens connected with the employment of surplus employees to be alleviated or removed, the Directive likewise does not stand in the way of the application of those provisions to the transferee' s advantage after the transfer.
20 The answer to be given to the first question referred to the Court must therefore be that Article 3(1) of Council Directive 77/187/EEC of 14 February 1977 is to be interpreted as meaning that all contracts of employment or employment relationships existing on the date of the transfer of an undertaking between the transferor and the workers employed in the undertaking transferred are automatically transferred to the transferee by the mere fact of the transfer.
The second question
25 Although in paragraph 28 of its judgment in the Abels case the Court mentions the extent of court supervision of the procedure, that reference, which is explained by the difficulty, mentioned in paragraph 12 of that judgment, of defining the concept of contractual transfer used in Article 1(1) of the Directive in view of the differences between the legal systems of the Member States, does not enable the scope of the Directive to be ascertained solely on the basis of a textual interpretation of the concept of contractual transfer, as paragraph 13 of the judgment indicates, or, consequently, its scope to be determined according to the kind of supervision exercised by the administrative or judicial authority over transfers of undertakings in the course of a specific creditors' arrangement procedure.
26 Given all the considerations set out in the judgment in the Abels case, the decisive test is therefore the purpose of the procedure in question.
28 On the one hand, for the application "in all its effects" of the Law on Insolvency, it must be assimilated to the decree ordering compulsory administrative liquidation as provided for by Article 195 et seq. and Article 237 of the Law on Insolvency. It is apparent from those latter provisions taken together that, save for the particular features specific to it, compulsory administrative liquidation has effects which in substance are identical to those of bankruptcy proceedings.
29 Secondly, the decree ordering the special administration procedure to be applied may also authorize the undertaking to continue trading under the supervision of an auditor for a period to be determined according to the detailed provisions of the Law. According to Article 2 of the Law of 3 April 1979, the powers of that auditor include the power to draw up a programme whose implementation must be authorized by the supervisory authority and which must comprise, as far as is possible and taking account of creditors' interests, "a restructuring plan compatible with the trends of industrial policy, and specify the plants to be brought back into operation and those to be expanded as well as the plants or business units to be transferred".
31 If no decision is taken on that last matter or if the period of validity of a decision authorizing the undertaking to continue trading has expired, the aim, consequences and risks of a procedure such as the compulsory administrative liquidation procedure are comparable to those which led this Court to conclude, in its judgment in the Abels case, that Article 1(1) of the Directive did not apply to transfers of an undertaking, business or part of a business in a situation in which the transferor had been adjudged insolvent. Like insolvency proceedings, that procedure is designed to liquidate the debtor' s assets in order to satisfy the body of creditors, and transfers effected under this legal framework are consequently excluded from the scope of the Directive. As the Court pointed out in its judgment in Abels, without that exclusion, a serious risk of a general deterioration in the living and working conditions of workers, contrary to the social objectives of the Treaty, could not be ruled out.
32 On the other hand, it is apparent from the provisions of the Italian Law that when the decree ordering the application of the special administration procedure also authorizes the undertaking to continue trading under the supervision of an auditor, the primary purpose of that procedure is to give the undertaking some stability allowing its future activity to be safeguarded. The social and economic objectives thus pursued cannot explain nor justify the circumstance that, when all or part of the undertaking concerned is transferred, its employees lose the rights which the Directive confers on them under the conditions which it lays down.
33 In this regard, the national court points out in particular in its order for reference that the report on Decree-Law No 26/1979 states that the purpose of the procedure is to rescue the parts of an undertaking which are basically sound, that an undertaking under special administration may, for the purpose of resuming operations and supplementing plant, land and industrial equipment, obtain loans whose repayment is guaranteed by the State and, finally, that under the special administration procedure the protection of creditors' interests is less extensive than in other liquidation procedures and that, in particular, creditors are not involved in decisions concerning the continued operation of the undertaking.
34 The answer to the second question must therefore be that Article 1(1) of Council Directive 77/187/EEC of 14 February 1977 does not apply to transfers of undertakings made as part of a creditors' arrangement procedure of the kind provided for in the Italian legislation on compulsory administrative liquidation to which the Law of 3 April 1979 on special administration for large undertakings in critical difficulties refers. However, that provision of that directive 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 effect.