European Law (2016/2017) Seminar 6

European Law, Week 7: Transfer of Undertakings & Collective Redundancies (Seminar 6) (2016/2017) Utrecht University. 

European Law: Seminar 6 (Week 7) Transfer of undertakings & collective redundancies

Question 1

What is the purpose of the Collective Redundancies Directive and which three, distinct aspects does it regulate for this purpose?

Answer to Question 1:

The purpose of the Directive is in preamble 2 of the Directive: ‘’Greater protection should be afforder to workers in the event of collective redundancies while taking into account the need for balanced economic and social development within the Community.’’

The Collective Redundancies Directive is the Directive 1998/59/EC (collective redundancies). The purpose of the Directive is to protect workers. The Directive obliges the enterprise concerned to start negotiations with workers representatives. To see whether collective redundancies can be avoided, the number of workers affected can be reduced, and whether the consequences can be mitigated by recourse to accompanying social measures.

According to article 1, collective redundancies apply to dismissals effected by an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the Member States, the number of redundancies is, (i) either over a period of 30 days; at least 10 in establishments normally employing more than 20 and less than 100 workers, at last 10% of the number of workers in establishments normally employing at least 100 but less than 30 workers, at least 30 in establishments normally employing 300 workers or more, (ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question.

The Directive regulates that the employer should do three things, before he can dismiss employees:

1. Information and consultation with the workers representatives (article 2 Directive)
2. Notify the competent public authority in writing of any projected collective redundancies (article 3 Directive) > with all the relevant information
3. The redundancies shall take effect not earlier than 30 days after the notification referred to in article 3(1) without prejudice to any provisions governing individual rights with regard to notice of dismissal.

Question 2

Does the Collective Redundancies contain a definition on the following concepts?
- If so, how should they be interpreted?

- If not, what do they entail according to case law?

a.            Collective redundancy (collectief ontslag)

b.            Workers’ representatives (vertegenwoordigers van werknemers)

c.            Notion of establishment (notie van vestiging)

Answer to Question 2:

1. Collective redundancy is regulated in article 1(1)(a) Directive 98/59/EC. This is a ‘’dismissal effected by an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the Member States, the number of redundancies is:

1. either over a period of 30 days; at least 10 in establishments normally employing more than 20 and less than 100 workers, at last 10% of the number of workers in establishments normally employing at least 100 but less than 30 workers, at least 30 in establishments normally employing 300 workers or more,
2. (ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question.’’

‘’Redundancy’’ itself is not regulated by the Directive, but it is regulated by the case-law in the Junk case: ‘’it is the declaration of the employer that he intends to terminate the contract of employment.’’ Par. 39

2. Workers representatives are according to article 1(1)(b) the workers representatives provided for by the laws or practices of the Member States.
3. The notion of establishment is not regulated by the Directive. Therefore, the case law is important. The interpretation must be very broadly, to let so many redundancies as possible fall within the scope of the Directive. They want to protect as many employees as they can. The notion of establishment is regulated by a case which was not subscribed.  

Question 3

Mr. Dedham works in the company of ‘CT United’. However, business is not going well and the company has to dismiss employees due to serious financial difficulties. The employer first sets up a social plan with the trade unions for the workers of ‘CT United’ who are selected  for dismissal. Then the employer gives notices of dismissal to 55 employees. The contracts of employment end after a 3 month period of notice. After the employer has given notice to the employees that are going to be dismissed, the employer notifies the public authorities of the collective redundancies.

Mr. Dedham is of the opinion that his dismissal is ineffective and goes to court.

1. Why would Mr. Dedham think his dismissal was ineffective?

Answer to question 3a:

According to the Junk case, ‘’the employer must give notice of his intention to dismiss employees. He must give notice that he wants to terminate the contracts of employment. Secondly, the employer must follow the consultation procedure provided for in article 2 Directive 1998/59/EC and after notification of the projected collective redundancies as provided for in articles 3 and 4 of that Directive.’’

The employer should, according to article 2 Directive 98/59, give all the relevant information to the workers representatives. He also should begin consultations with the workers representatives. This did not happen in the case and therefore the employer did not fulfil the criteria of the Directive. Therefore, the dismissal is ineffective.

• The right order was not followed (article 2, 3, 4).

2. What does the ECJ state about the two procedures dealt with in the Collective Redundancies Directive?

Answer to question 3b:

In the Junk case the ECJ states that the two procedures must be followed. The employer is according to Article 2 obliged to begin consultations with the workers’ representatives in good time in the case where he is contemplating collective redundancies. Article 3 requires the employer to notify the competent public authority of any projected collective redundancies. An employer cannot terminate contracts of employment before he has engaged in the two procedures in question (par. 41). The employer is entitled to carry out redundancies after the conclusion of the consultation procedure provided for in article 2 of the directive and after notification of the projected collective redundancies as provided for in articles 3 and 4 of that directive (par. 54).

In Nederland is het zo dat het UWV de aanvraag pas in behandeling neemt als de wachttijd al is verstreken.

Question 4

Ms. Hamilton worked in a French chocolate company manufacturing, Sweets & Chocolate. However, the company had to stop business activities because of financial difficulties. When all activities stopped and there was no longer any goodwill in the business, the entire company was sold to Wonka, another French company. This included all of the premises and all of the specific equipment to produce artisanal chocolate. Wonka decided to pick up the business where Sweets & Chocolate left off and therefore took over all of its employees, except for Ms. Hamilton. Next to this, it built up its own clientele.

Ms. Hamilton summoned Wonka to appear in court, claiming that, because of the transfer of the undertaking from Sweets & Chocolate to Wonka, her contract of employment and the rights and obligations therein had transferred from the former to the latter company. She asked for the payment of her salary from the day on which the business activities of Sweets & Chocolate ceased, and for the confirmation of her employment contract with Wonka.

1. Which EU legislation applies to this case?

Answer to Question 4a:

The EU legislation which applies to this case is the Directive 2001/23/EC re. transfers of undertakings. Also the case Spijker is relevant for this case.

b.            Which criteria need to be satisfied for a transfer of an undertaking to take place?

Answer to Question 4b:

The criteria for a transfer of an undertaking to be able to take place:

1. There has to be a change of employership  (Company A is transferring with Company B) There is a change in the legal person which is responsible, the contracts will be changed to the taking over by the new employer.
2. Employees may not be dismissed just because there is a change of employership. (article 4 Directive 2001/23/EC)
3. There is a right to consultation and information (article 7 Directive 2001/23/EC)

c.            Was Ms. Hamilton right in her statement?
 

Answer to Question 4c:

The whole company is being transferred to the other company, also the employees are being transferred, except for Ms. Hamilton. This is the same situation as in the case Spijkers.  According to this case, par. 12: ‘’a transfer of an undertaking, business or part of a business does not occur merely because its assets are disposed of. Instead it is necessary to consider, in a case such as the present, whether the business was disposed of as a going concern, as would be indicated, inter alia, by the fact that its operation was acutally continued or resumed by the new employer, with the same or similar activities.’’ Par 13: ‘’In order to determine whether those conditions are met, it is necessary to consider all the facts characterizing the transaction in question, including the type of undertakings or business, whether or not the business’ tangible assets, such as buildings and movable property, are transferred, the value of its intangible assets at the time of the transfer, whether or not the majority of its employees are taken over by the new employer, whether or not its customers are transferred and the degree of similarity between the activities carried on before and after the transfer and the period, if any, for which those activities were suspended.’’

In the case, Ms. Hamilton is the only person who is not transferred to the other company. All her colleagues are being transferred. All of the assets and moveable property are being handed over to the new employer. In addition, after the transfer of the company, there is a similarity between the activities carried on before and after the transfer. Therefore, Ms. Hamilton is right and she should get her payment and employment contract.

Production company > tangible assets are being taking over.

Question 5

In the case of a transfer of an undertaking:

1. Does an employee working for the transferor have the right to refuse to transfer to the transferee?

Answer to question 5a:

Yes, the employee working for the transferor is allowed to refuse the transfer to the transferee. The employee has the right to choose his working place. Par. 34 Merckx case

2. If so, what happens to the employee’s contract of employment?

Answer to question 5b:

The contract will end. In principle, the employee will have no right to compensation or social benefits, because he is the one to end the contract. However, if the transfer involves a substantial change in working conditions to the detriment of the employee, the employer shall be regarded as having been responsible for termination of the contract of employment or the employment relationship (article 4(2) Directive 2001/23). Member States should regulate this situation further on. (par. 35 Merckx).

c.            Who should bear the responsibility for terminating the contract in this case, and why is that important?

Answer to Question 5c:

In principle, the employee is responsible himself, because he ends the contract. However, the employee has the right to financial compensation in case of unemployment, if the employer is responsible for the unemployment (article 4(2) Directive 2001/23). In the case the employee resigns because he does not agree with the transfer, then the employer is responsible and held liable for the social compensation. If the employee resigns because he does not like the consequences of the transfer, than the employer is being held responsible (this is important to know for example for compensation, social security benefits). 

(par. 37 Merckx).

European Law: Seminar 7 Transfer of undertakings & collective redundancies

Question 1

What is the purpose of the Collective Redundancies Directive and which three, distinct aspects does it regulate for this purpose?

Answer to Question 1:

The purpose of the Directive is in preamble 2 of the Directive: ‘’Greater protection should be afforder to workers in the event of collective redundancies while taking into account the need for balanced economic and social development within the Community.’’

The Collective Redundancies Directive is the Directive 1998/59/EC (collective redundancies). The purpose of the Directive is to protect workers. The Directive obliges the enterprise concerned to start negotiations with workers representatives. To see whether collective redundancies can be avoided, the number of workers affected can be reduced, and whether the consequences can be mitigated by recourse to accompanying social measures.

According to article 1, collective redundancies apply to dismissals effected by an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the Member States, the number of redundancies is, (i) either over a period of 30 days; at least 10 in establishments normally employing more than 20 and less than 100 workers, at last 10% of the number of workers in establishments normally employing at least 100 but less than 30 workers, at least 30 in establishments normally employing 300 workers or more, (ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question.

The Directive regulates that the employer should do three things, before he can dismiss employees:

1. Information and consultation with the workers representatives (article 2 Directive)
2. Notify the competent public authority in writing of any projected collective redundancies (article 3 Directive) > with all the relevant information
3. The redundancies shall take effect not earlier than 30 days after the notification referred to in article 3(1) without prejudice to any provisions governing individual rights with regard to notice of dismissal.

Question 2

Does the Collective Redundancies contain a definition on the following concepts?
- If so, how should they be interpreted?

- If not, what do they entail according to case law?

a.            Collective redundancy (collectief ontslag)

b.            Workers’ representatives (vertegenwoordigers van werknemers)

c.            Notion of establishment (notie van vestiging)

Answer to Question 2:

1. Collective redundancy is regulated in article 1(1)(a) Directive 98/59/EC. This is a ‘’dismissal effected by an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the Member States, the number of redundancies is:

1. either over a period of 30 days; at least 10 in establishments normally employing more than 20 and less than 100 workers, at last 10% of the number of workers in establishments normally employing at least 100 but less than 30 workers, at least 30 in establishments normally employing 300 workers or more,
2. (ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question.’’

‘’Redundancy’’ itself is not regulated by the Directive, but it is regulated by the case-law in the Junk case: ‘’it is the declaration of the employer that he intends to terminate the contract of employment.’’ Par. 39

2. Workers representatives are according to article 1(1)(b) the workers representatives provided for by the laws or practices of the Member States.
3. The notion of establishment is not regulated by the Directive. Therefore, the case law is important. The interpretation must be very broadly, to let so many redundancies as possible fall within the scope of the Directive. They want to protect as many employees as they can. The notion of establishment is regulated by a case which was not subscribed.  

Question 3

Mr. Dedham works in the company of ‘CT United’. However, business is not going well and the company has to dismiss employees due to serious financial difficulties. The employer first sets up a social plan with the trade unions for the workers of ‘CT United’ who are selected  for dismissal. Then the employer gives notices of dismissal to 55 employees. The contracts of employment end after a 3 month period of notice. After the employer has given notice to the employees that are going to be dismissed, the employer notifies the public authorities of the collective redundancies.

Mr. Dedham is of the opinion that his dismissal is ineffective and goes to court.

1. Why would Mr. Dedham think his dismissal was ineffective?

Answer to question 3a:

According to the Junk case, ‘’the employer must give notice of his intention to dismiss employees. He must give notice that he wants to terminate the contracts of employment. Secondly, the employer must follow the consultation procedure provided for in article 2 Directive 1998/59/EC and after notification of the projected collective redundancies as provided for in articles 3 and 4 of that Directive.’’

The employer should, according to article 2 Directive 98/59, give all the relevant information to the workers representatives. He also should begin consultations with the workers representatives. This did not happen in the case and therefore the employer did not fulfil the criteria of the Directive. Therefore, the dismissal is ineffective.

• The right order was not followed (article 2, 3, 4).

2. What does the ECJ state about the two procedures dealt with in the Collective Redundancies Directive?

Answer to question 3b:

In the Junk case the ECJ states that the two procedures must be followed. The employer is according to Article 2 obliged to begin consultations with the workers’ representatives in good time in the case where he is contemplating collective redundancies. Article 3 requires the employer to notify the competent public authority of any projected collective redundancies. An employer cannot terminate contracts of employment before he has engaged in the two procedures in question (par. 41). The employer is entitled to carry out redundancies after the conclusion of the consultation procedure provided for in article 2 of the directive and after notification of the projected collective redundancies as provided for in articles 3 and 4 of that directive (par. 54).

In Nederland is het zo dat het UWV de aanvraag pas in behandeling neemt als de wachttijd al is verstreken.

Question 4

Ms. Hamilton worked in a French chocolate company manufacturing, Sweets & Chocolate. However, the company had to stop business activities because of financial difficulties. When all activities stopped and there was no longer any goodwill in the business, the entire company was sold to Wonka, another French company. This included all of the premises and all of the specific equipment to produce artisanal chocolate. Wonka decided to pick up the business where Sweets & Chocolate left off and therefore took over all of its employees, except for Ms. Hamilton. Next to this, it built up its own clientele.

Ms. Hamilton summoned Wonka to appear in court, claiming that, because of the transfer of the undertaking from Sweets & Chocolate to Wonka, her contract of employment and the rights and obligations therein had transferred from the former to the latter company. She asked for the payment of her salary from the day on which the business activities of Sweets & Chocolate ceased, and for the confirmation of her employment contract with Wonka.

1. Which EU legislation applies to this case?

Answer to Question 4a:

The EU legislation which applies to this case is the Directive 2001/23/EC re. transfers of undertakings. Also the case Spijker is relevant for this case.

b.            Which criteria need to be satisfied for a transfer of an undertaking to take place?

Answer to Question 4b:

The criteria for a transfer of an undertaking to be able to take place:

1. There has to be a change of employership  (Company A is transferring with Company B) There is a change in the legal person which is responsible, the contracts will be changed to the taking over by the new employer.
2. Employees may not be dismissed just because there is a change of employership. (article 4 Directive 2001/23/EC)
3. There is a right to consultation and information (article 7 Directive 2001/23/EC)

c.            Was Ms. Hamilton right in her statement?
 

Answer to Question 4c:

The whole company is being transferred to the other company, also the employees are being transferred, except for Ms. Hamilton. This is the same situation as in the case Spijkers.  According to this case, par. 12: ‘’a transfer of an undertaking, business or part of a business does not occur merely because its assets are disposed of. Instead it is necessary to consider, in a case such as the present, whether the business was disposed of as a going concern, as would be indicated, inter alia, by the fact that its operation was acutally continued or resumed by the new employer, with the same or similar activities.’’ Par 13: ‘’In order to determine whether those conditions are met, it is necessary to consider all the facts characterizing the transaction in question, including the type of undertakings or business, whether or not the business’ tangible assets, such as buildings and movable property, are transferred, the value of its intangible assets at the time of the transfer, whether or not the majority of its employees are taken over by the new employer, whether or not its customers are transferred and the degree of similarity between the activities carried on before and after the transfer and the period, if any, for which those activities were suspended.’’

In the case, Ms. Hamilton is the only person who is not transferred to the other company. All her colleagues are being transferred. All of the assets and moveable property are being handed over to the new employer. In addition, after the transfer of the company, there is a similarity between the activities carried on before and after the transfer. Therefore, Ms. Hamilton is right and she should get her payment and employment contract.

Production company > tangible assets are being taking over.

Question 5

In the case of a transfer of an undertaking:

1. Does an employee working for the transferor have the right to refuse to transfer to the transferee?

Answer to question 5a:

Yes, the employee working for the transferor is allowed to refuse the transfer to the transferee. The employee has the right to choose his working place. Par. 34 Merckx case

2. If so, what happens to the employee’s contract of employment?

Answer to question 5b:

The contract will end. In principle, the employee will have no right to compensation or social benefits, because he is the one to end the contract. However, if the transfer involves a substantial change in working conditions to the detriment of the employee, the employer shall be regarded as having been responsible for termination of the contract of employment or the employment relationship (article 4(2) Directive 2001/23). Member States should regulate this situation further on. (par. 35 Merckx).

c.            Who should bear the responsibility for terminating the contract in this case, and why is that important?

Answer to Question 5c:

In principle, the employee is responsible himself, because he ends the contract. However, the employee has the right to financial compensation in case of unemployment, if the employer is responsible for the unemployment (article 4(2) Directive 2001/23). In the case the employee resigns because he does not agree with the transfer, then the employer is responsible and held liable for the social compensation. If the employee resigns because he does not like the consequences of the transfer, than the employer is being held responsible (this is important to know for example for compensation, social security benefits). 

(par. 37 Merckx).