On April 6, 2017 in the case C-336/15, the European Court of Justice (ECJ) has explained the Transfers of Undertakings Directive 2001/23/EC, Article 3, with regard to the safeguarding of employees’ rights in the event of transfers of undertakings.
The Court stated that the transferee must, when dismissing an employee more than one year after the transfer of the undertaking, include, in the calculation of that employee’s length of service, which is relevant for determining the period of notice to which that employee is entitled, the length of service which that employee acquired with the transferor.
In this case four employees, members of a Swedish Trade Union, were dismissed on receipt of six months’ notice of redundancy on economic grounds. When the transfer took place, the employees were 55 years of age or older at the time of their dismissal, as well as being employed individually for a period greater than 10 years.
When the employees were transferred to new employer ISS Facility Services AB (ISS), company incorporated under Swedish law, the transferors (Apoteket AB and AstraZeneca AB) were bound by collective agreements, which requires the notice period to be extended an additional 6 months for the exception of the above mentioned employees.
The Trade Union brought the action before the court claiming that ISS should compensate the employees for the loss sustained by ISS’ failure to give said employees adequate notice.
The case raises the question of the interpretation of EU law, namely the Directive 2001/23/EC. The referring court (Labor Court, Sweden) asked, whether Article 3 of Directive 2001/23/EC must be interpreted as meaning that the transferee must, when dismissing an employee more than one year after the transfer of the undertaking, include, in the calculation of that employee’s length of service, which is relevant for the determination of the period of notice to which that employee is entitled, that employee’s length of service with the transferor.
ECJ first of all recalled that Directive 2001/23/EC seeks to protect employees in the event of transfers of undertakings, particularly in order to ensure that their rights are safeguarded. ECJ previously ruled, while length of service with the transferors is not in itself a right that the transferred employees may assert against the transferee, the fact nonetheless remains that, in certain cases, it is used to determine certain financial rights of employees, and that those rights must then, in principle, continue to be observed by the transferee in the same way as they were observed by the transferor (Case C-108/10. Ivana Scattolon v Ministero dell’Istruzione, dell’Università e della Ricerca, EU:C:2011:542, para 69).
In discussed case it was not disputed that the extended period of notice of 6 months claimed by the Trade Union confers entitlement to six months of wages. It followed that if it is to be classified as a right of a financial nature that it must be granted to an employee when his employment relationship is terminated.
ISS was entitled, after the expiration of the one-year period, for economic reasons and thus on a ground other than the transfer of undertakings, to no longer continue to observe the terms and conditions set out in the collective agreement applicable to the transferred employees. However, the ECJ did not find that the transferee amended those terms and conditions unfairly in regard to the transferred employees.
The ECJ stated that, since one year has passed and no amendments to the terms and conditions of the collective agreement were made, the employees cannot be exposed to less favorable working conditions than those which were applicable prior to the transfer.
The above mentioned arguments being taking into consideration show, the ECJ disapproved the transferee’s argument that the second subparagraph of Article 3(3) of Directive 2001/23/EC must be interpreted as meaning that it is not necessary to take account of the lengths of service of the transferred employees prior to their transfer.
The European Court of Justice. C‑336/15, Unionen v Almega Tjänsteförbunden, ISS Facility Services AB, ECLI:EU:C:2017:276.
By Inga Klimašauskienė, Associate Partner at law firm GLIMSTEDT