Lecture 5 European Labour Law and Social Security Law
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Course
European Labour Law and Social Security Law
Institution
Maastricht University (UM)
This document contains all the notes I took during lecture 5 of the course 'European Labour Law and Social Security Law'. I passed this course with an 8!
We are going to talk about three things: 1) transfer of undertakings 2) collective
redundancies 3) insolvency. Insolvency is much more a private law matter. Once a company
is insolvent, there is no employee protection.
We are going to look at the difference between transfer of undertakings and insolvency. That
is the main context in which we have to discuss insolvency.
Content
• What is restructuring?
• Transfer of Undertakings
• Collective redundancies
• Insolvency
• Common features
• Employee involvement?
• Discussion of each instrument
Development & Common features
Directives do no prohibit collective redundancies / transfer of undertakings. The aim is to
ensure a minimum protection for employees in case it happens. Also to make the playing
field for employers a bit more even. Why was that necessary?
In the 1970’s, after the big oil shock, there was a lot of economic stagnation. The economic
climate was not favourable. Enterprises tried to figure out where to lay off employee’s best.
To everyone’s surprise, there are a couple of ideas that the enterprise took into account that
according to legislation should not be taken into account. What happened is that the board of
directors looked into where redundancies were least costly, easiest to achieve, procedures
would be in different countries, what the costs would be, is there a worker’s council (big
difference between countries between rights of worker’s council). The legislator said: this is
not how we want to function. We want an employer to make a rational decision and a rational
decision should be that you close down less viable parts / older parts / parts that are already
written off. Instead, the collective redundancies happened in the country where it was the
easiest. Also the fact that the collective redundancies happened in a different country than
the home country of the enterprise. There was an example a couple of years ago from Opel.
Opel was back then a German thing. They had too much capacity so they had to close down
a part of the enterprise. The German government lobbied against this. The part in Belgium
was closed down and the Belgians were not happy. These things should not happen.
The directive should give a flour of rights that should make the whole process more
comparable. So if you want a collective redundancy, what should you be doing? Obviously
when you leave national dismissal law as it is, there will be huge differences. So yes there is
a minimum protection / guarantee / harmonization, but it is not more than that. Especially in
collective redundancies, there is a lot of national law behind it.
• No prohibition of employer’s action
• Double aim:
1. Minimum protection for employees
They needed different kinds of minimum protection for the three options. In case of
insolvency you only want a minimum amount of money that can be used against the shock.
In a transfer of undertakings, you want to keep your employment conditions. The way of
minimum protection materially is different. But what you see is a procedural protection and
information and consultation rights.
• Instruments differ according to need
• Guarantees
• Information & consultation rights
2. Establishment of level playing field employers
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, Transfer of Undertaking
If the work changes owner, what the directive says is that it should not matter who provides
the work as long as the work is the same and the surroundings are so much the same, the
employee has the right to follow his or her work.
In case there is a transfer of undertakings the directive offers a threefold protection.
Directive 2001/23
• Aim / purpose:
• Regulate transfer of undertakings
• Minimum protection: art. 3, 4, 7
Article 3 is about the employment conditions, article 4 is about the prohibition of dismissal
and article 7 is about employee participation and the possibilities there. Once you have
established the applicability, you know these rights apply to the employees.
• Applicability:
• Personal scope
• Material scope
• Consequences:
• Art. 3, 4, 7
Personal scope
• Employee: in this directive, an employee is defined according to national law.
• art. 2(1)(d): nat. law definition
It is not always easy to know which law is applicable. If you have a transfer of
undertakings within one member state, only one law can be applicable. But
what in case it’s a cross border thing, the directive does not say which law is
applicable.
• If you want to be protected, you need to have an employment contract in the
first place. In the first place it is the transferor state. The state of the enterprise
that is to be taken over, that is decisive. In the case law you see a focus on
the transferor. What will happen when the worker will not be seen as an
employee in the other country? There are no cases on this. If you have an
employee in state A, being not an employee anymore in the other state where
the undertaking is transferred to, we don’t know what will happen. There are
two conflicting things: you have to keep all right and duties. But if you have
legal provisions in the state you go to, than you have this conflict.
• National laws are free to define the employee, but there is one thing. In
paragraph 2 you cannot exclude part time workers or fixed time workers or
any type of atypical workers. The transfer of undertakings also applies to part-
time workers / fixed time workers. But if your fixed-time contract ends before
the transfer, then you have to take that into account. But generally, the
principles are applicable.
• But: art. 2 (2): to include in principle …
• Employed at date of transfer if the employer has given you notice and the
employment contract is finished and then an transfer of undertakings appear,
you don’t have to be taken over. There is a difference in case something went
wrong with the dismissal. But generally speaking, you have to be employed at
the date of transfer. If it doesn’t exist, there is nothing for the transferee to
take over. You can’t separate the employment contract from the transfer.
Once you have a date for the transfer and you have a date at which the other
person really is in charge, you then cannot say that the employment contracts
follow at a different date. Then you have the responsibility. The transfer
contract follow at that date. That is the Celtec case.
• Cf. C-478/03 (Celtec)
According to Celtec, the date of transfer is the date on which responsibility as
employer for carrying on the business of the unit in question moves from the
transferor to the transferee.
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