Transfer of undertakings: procedural aspects

On August 25, 2011, in Transfer of undertakings, by Kalina Jaroslawska

Employers participating in the transfer of undertakings must meet certain procedural requirements to make sure the the transfer complies with the labour legislation and measures for protection of employees.

First, they must notify their trade unions or – where there are no trade unions present – their employees of the transfer and related matters (such as reasons for the transfer and its predicted effects as well as plans concerning employment or work and pay conditions). Notification must be made in writing at least 30 days before the planned date of the transfer. However, failure to provide notification does not render the transfer null and void.

Second, the employer may not terminate the employee solely on the grounds of the transfer. Such termination will be considered unjustified and trigger employee remedies I discussed in some of the blog entries before. However, there may be other reasons to justify termination, e.g. the need to restructure or reduce the employer’s workforce, or an employee’s poor performance. The important thing is that any such reason must be genuine and concrete.

Third, employers partaking in the transfer of undertakings must bear in mind that in connection with the transfer an employee is entitled to make use of a “summary” termination procedure, that is, an employee may terminate the employment contract on 7 days’ notice within 2 months of transfer, without giving reasons. An employment contract so terminated will be understood to have been terminated by the employer with the applicable period of notice. Since the procedure of transfer is aimed at protecting the employee in the first place, there is no equivalent right for the employer and no “summary” termination procedure is available for them. As mentioned above, even regular dismissals solely on the grounds of the transfer are limited.

Photo: http://www.flickr.com/photos/cristinabe/4635930677/

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In today’s entry I will depart for a moment from the immigration issues to turn the readers’ attention to the recent ruling of the European Court of Justice on transfer of undertakings (case no. C-463/09 CLECE SA v Maria Valor and Ayuntamiento de Cobisa, judgment of January 20, 2011).

The EC transfer of undertakings legislation is contained in the Directive 2001/23/EC of 12 March 2001 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 undertakings or businesses.

So far the ECJ has reached a number of judgments according to which takeover of tasks by another organization (e.g. through contracting out) might trigger transfer of undertakings and the consequent takeover of related staff.

In case no. C-463/09 the problem was the other way round, i.e. whether a situation in which a public authority terminates a contract for outsourced services (here: cleaning) and undertakes those services by itself by hiring new employees for that purpose is caught by transfer of undertakings. In its ruling the ECJ stated that the mere taking over by the public authority of the cleaning work that was previously carried out by the contractor, cannot, of itself, indicate the existence of a transfer undertakings. In consequence, employees of the contractor who did the cleaning services have not been taken on by the public authority as a result of terminating the contract and assuming the cleaning work back.

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