As will be recalled, in Albron Catering BV v FNV Bondgenoten [2011] ICR 373 the ECJ held that the Acquired Rights Directive applied to workers assigned to an undertaking that transferred even though they were not employed by that undertaking before the transfer. The Dutch Supreme Court has now given its decision in the case which raised the same issue under the Dutch Civil code as will arise under TUPE.
The Facts
The employee, R, was employed by Heineken Nederlands Beheer BV (‘HNB’). HNB was the employer of all workers in the Heineken Group, and its staff worked for various Heineken Group Companies. R was employed by HNB from 17 July 1985 to 1 March 2005 as a staff member in the ‘catering’ department. He was assigned by HNB, along with about 70 other staff members in that department, to Heineken Nederland BV (‘Heineken Nederland’), a company which, until 1 March 2005, supplied catering at various locations to employees of the Heineken group. A collective agreement between HNB and the FNV union applied to R’s employment..
The catering activities carried out by Heineken Nederland were transferred to Albron on 1 March 2005. FNV and R brought an action against Albron before the Dutch Court for a declaration that the transfer of the catering business which took place on 1 March 2005 between Heineken Nederland and Albron constituted the transfer of an undertaking within the meaning of the Directive and that employees of HNB who were assigned to Heineken Nederland automatically became staff members of Albron as from that date.
The FNV and R also sought an order against Albron that the latter be required to comply with the collective agreement between HNB and FNV.
The Decision of the ECJ
The ECJ held that:
- Under Article 3(1) of the Directive the protection conferred on employees in the event of a change of employer concerned the rights and obligations of the transferor arising from the existence, at the date of the transfer of the undertaking, of an employment contract or an employment relationship.
- Whether there was the existence or otherwise of a contract or employment relationship was (pursuant to Article 2(2)), a matter for the national law. Further, the fact that there was a distinction in Article 3(1) of the Directive between an employment contract, and an employment relationship, at the date of the transfer suggested a contractual link with the transferor was not required in all circumstances for employees to be able to benefit from the protection conferred by the Directive.
- It followed that the position of a contractual employer, who was not responsible for the economic activity of the economic entity transferred, could not take precedence, for the purposes of determining the identity of the transferor, over the position of a non-contractual employer who is responsible for that activity. Therefore, if, within a group of companies, there are two employers, one having a contractual relationship with the employees of that group and the other a non-contractual relationship with them, it is also possible to regard as a ‘transferor’, the employer responsible for the economic activity of the entity transferred to which the staff are assigned despite the absence of a contractual relationship with those staff.
Postscript – The Decision of the Dutch Supreme Court
When the case went back to the Dutch Court of Appeal and the Supreme Court, Albron argued that as the Dutch Civil Code Art. 7.663 (the domestic legislation that gave effect to the Acquired Rights Directive) expressly referred to the employee, in the context of the transfer, being employed under a ‘contract of employment’, it exceeded the permissible scope of statutory interpretation to extend this meaning to include employees who were assigned to an undertaking but not employed by it.
In April, 2013, 8 years after the case commenced, the Dutch Supreme Court held that the Dutch Civil Code ought to be interpreted in accordance with the Directive and that even if the relevant paragraph of the Civil Code did not expressly include employees who were in a non-contractual employment relationship with the transferor it should interpreted to apply to such employees. It was held that as Art. 7.663 of the Dutch Civil Code was intended to implement the Directive the legislators, must have intended that the expression ’employer’ would have the same meaning as transferor in the Directive and would include those in an ’employment relationship’ even if not working under a contract of employment.
A similar issue will face any Employment Tribunal looking at this issue under TUPE. Reg 3 and Reg 4 of TUPE apply to ’employees’, and Reg 4 transfers the rights, powers, duties and liabilities arising under or in connection with a contract of employment. Although the definition of an ’employee’ in Reg 2 is that it means “any individual who works for another person whether under a contract of service or apprenticeship or otherwise”, it was held in Governing Body of Clifton Middle School v Askew [1999] EWCA Civ 1892 that this wording requires a contractual relationship between the transferor and the employees.
A further issue will arise as to how a transfer-related unfair dismissal claim could be pursued if the transferor is not the employer for the purpose of the right to claim unfair dismissal under Part X of the Employment Rights Act 1996.