Week 5 Restructuring
Introduction
During the 1970, the first major economic crisis the EU knew, it became clear that within the
internal market, minimum rules had to apply to collective redundancies, transfers of
undertaking and insolvency in order to prevent forum shopping of entrepreneurs. The idea of
the three directives that came out of this was not so much to prohibit collective redundancies,
transfers or insolvencies from happening, but to make sure that the processes go according
to the same minimum rules in all Member States. This means that the directives focus on
procedural requirements and minimum guarantees for employees.
Reading Materials:
Literature
- C. Barnard 2012, pp. 577-649
- A.P. van der Mei, Collective Redundancies: Judicial Fine-Tuning of a Classic Concept of
EU Labour Law, European Law Review, 2017, 82-91
Case Law:
Case C-242/09 Albron
Case C-426/11 Alemo-Herron
Case C-44/08 Akavan
Case C-149/16 Socha
This case is about employees at a hospital with a contract of indefinite duration. The hospital
notified the employees about changes in the pay and working conditions and in particular to
the period for acquiring the right to the length of service reward. The referring court was
uncertain whether the hospital simply wanted to modify certain aspects of the employment
contracts or whether the unilateral amendment of the contractual terms that are at issue
constitutes redundancy within the meaning of article 1 of that directive.
First the court makes clear that article 1 (1) of Directive 98/59 only applies when there are at
least five redundancies, that the directive distinguished between redundancies and
terminations of an employment contract which on the employers initiative for one or
more reasons not related to the individual worker concerned.
Regarding the concept of redundancy for the purpose of article 1(1)(a) of directive 98/59, the
court has held that that directive must be interpreted as meaning that the fact than an
employer makes significant changes to essential elements of his employment contract
for reasons not related to the individual employee concerned falls within that concept
( Pujante Rivera).
It follows that the fact that an employer makes a change that is not significant to an essential
element of the employment contract for reasons not related to in the individual employee
concerned or a significant change to a non-essential element of that contract for reason not
related to the individual employee concerned, cannot be classified as a redundancy within
the meaning of that directive.
In this case, the issue in the main proceedings cannot be considered to result in a significant
change to those contracts and to that that notice does not fall within the concept of
redundancy within the meaning of article 1(1)(a).
By contrast, the termination of an employment contract following the employees refusal to
accept a change such as that proposed in the notice of amendment must be
considered to bide a termination of an employment contract occurring on the
employers initiative for one or more reasons not related to the individual worker
concerned, within the meaning of the second sub paragraph of article 1(1) of that
directive, so that it must be taken into account when calculating the total number of
redundancies.
The court also looked at the consultation right. An employer is required to engage in the
consultation provided for in article 2 when it intends, to the detriment of the employees, to
, make a unilateral amendment to the terms of remuneration which, if refused, by the
employees, will result in termination of the employment relationship, to the extend that the
conditions laid down in article 1 (1) of that directive are fulfilled, which is for the referring
court to determine.
Case C-126/16 (FNV/Smallsteps)
Assignment
1.
a) A transfer of undertaking can only take place in case of a substantial transfer of material
assets. Discuss.
• In order to answer this question, we need to look at the Spijkers-criteria. This case provides
an answer to the question whether an entity retains its identity.
• This case was about Spijkers, a guy who was employed by Colaris as an assistant
manager of a slaughterhouse. At a certain point, the business activities ceased and no
goodwill remained. At this point, someone purchased the entire slaughterhouse, various
rooms and offices, the land, and certain specific goods. From February on, the
slaughterhouse was operated by a new employer, who had taken on all of Colaris’
employees except Spijkers and one other. Spijkers contended that there had been a
transfer of an undertaking within the meaning of the Directive.
• The court ruled that the decisive criterion for establishing the existence of a transfer of an
undertaking was: ‘The business in question retains its identity inasmuch as it is transferred
as going concern, which may be indicated in particular by the fact that its operation is
actually continued or resumed by the new employer with the same or similar
activities.
• in order to decide whether the business is transferred as a going concern the court ruled
that ‘it is necessary to consider all the facts characterising the transaction, including:
• The type of undertaking or business
• Whether the business’ tangible assets, such as buildings and moveable property, and
intangible assets, were transferred
• The value of intangible assets at the time of transfer
• Whether the majority of the business’ employees are taken over by the new employer
• Whether its customers are transferred
• The degree of similarity between the activities carried on before and after the transfer
• The period, if any, for which those activities were suspended
• The court said that no single factor was decisive, national courts had to make an
assessment of the overall position.
• You got two different approaches.
• The labour law approach: similarity of activity: the focus is less on the employer and more
on the similarity between the activity performed by the new employer compare with those
carried out by its predecessor. There was a lot of critique, because this approach
abandoned the flexibility offered by the Spijkers formulation and offended the national
courts which favoured the enterprise organisation approach.
• The commercial approach: economic entity: Süzen case
In this case the court said that, for the directive to be applicable, the transfer had to relate to
a stable economic entity. It continued that the term ‘entity’ referred to an organised grouping
of persons and assets facilitating the exercise of an economic activity which pursues a
specific objective. The court seems to reject the labour law activity test accepted in previous
case law.
• The question was raised how a national court knows whether an economic entity has been
transferred or not.
• The court distinguished between two types of business: those which were asset based and
those which were not.
• Asset-based business: there was a transfer of an understating only where there was a
transfer of significant tangible or intangible assets.
Introduction
During the 1970, the first major economic crisis the EU knew, it became clear that within the
internal market, minimum rules had to apply to collective redundancies, transfers of
undertaking and insolvency in order to prevent forum shopping of entrepreneurs. The idea of
the three directives that came out of this was not so much to prohibit collective redundancies,
transfers or insolvencies from happening, but to make sure that the processes go according
to the same minimum rules in all Member States. This means that the directives focus on
procedural requirements and minimum guarantees for employees.
Reading Materials:
Literature
- C. Barnard 2012, pp. 577-649
- A.P. van der Mei, Collective Redundancies: Judicial Fine-Tuning of a Classic Concept of
EU Labour Law, European Law Review, 2017, 82-91
Case Law:
Case C-242/09 Albron
Case C-426/11 Alemo-Herron
Case C-44/08 Akavan
Case C-149/16 Socha
This case is about employees at a hospital with a contract of indefinite duration. The hospital
notified the employees about changes in the pay and working conditions and in particular to
the period for acquiring the right to the length of service reward. The referring court was
uncertain whether the hospital simply wanted to modify certain aspects of the employment
contracts or whether the unilateral amendment of the contractual terms that are at issue
constitutes redundancy within the meaning of article 1 of that directive.
First the court makes clear that article 1 (1) of Directive 98/59 only applies when there are at
least five redundancies, that the directive distinguished between redundancies and
terminations of an employment contract which on the employers initiative for one or
more reasons not related to the individual worker concerned.
Regarding the concept of redundancy for the purpose of article 1(1)(a) of directive 98/59, the
court has held that that directive must be interpreted as meaning that the fact than an
employer makes significant changes to essential elements of his employment contract
for reasons not related to the individual employee concerned falls within that concept
( Pujante Rivera).
It follows that the fact that an employer makes a change that is not significant to an essential
element of the employment contract for reasons not related to in the individual employee
concerned or a significant change to a non-essential element of that contract for reason not
related to the individual employee concerned, cannot be classified as a redundancy within
the meaning of that directive.
In this case, the issue in the main proceedings cannot be considered to result in a significant
change to those contracts and to that that notice does not fall within the concept of
redundancy within the meaning of article 1(1)(a).
By contrast, the termination of an employment contract following the employees refusal to
accept a change such as that proposed in the notice of amendment must be
considered to bide a termination of an employment contract occurring on the
employers initiative for one or more reasons not related to the individual worker
concerned, within the meaning of the second sub paragraph of article 1(1) of that
directive, so that it must be taken into account when calculating the total number of
redundancies.
The court also looked at the consultation right. An employer is required to engage in the
consultation provided for in article 2 when it intends, to the detriment of the employees, to
, make a unilateral amendment to the terms of remuneration which, if refused, by the
employees, will result in termination of the employment relationship, to the extend that the
conditions laid down in article 1 (1) of that directive are fulfilled, which is for the referring
court to determine.
Case C-126/16 (FNV/Smallsteps)
Assignment
1.
a) A transfer of undertaking can only take place in case of a substantial transfer of material
assets. Discuss.
• In order to answer this question, we need to look at the Spijkers-criteria. This case provides
an answer to the question whether an entity retains its identity.
• This case was about Spijkers, a guy who was employed by Colaris as an assistant
manager of a slaughterhouse. At a certain point, the business activities ceased and no
goodwill remained. At this point, someone purchased the entire slaughterhouse, various
rooms and offices, the land, and certain specific goods. From February on, the
slaughterhouse was operated by a new employer, who had taken on all of Colaris’
employees except Spijkers and one other. Spijkers contended that there had been a
transfer of an undertaking within the meaning of the Directive.
• The court ruled that the decisive criterion for establishing the existence of a transfer of an
undertaking was: ‘The business in question retains its identity inasmuch as it is transferred
as going concern, which may be indicated in particular by the fact that its operation is
actually continued or resumed by the new employer with the same or similar
activities.
• in order to decide whether the business is transferred as a going concern the court ruled
that ‘it is necessary to consider all the facts characterising the transaction, including:
• The type of undertaking or business
• Whether the business’ tangible assets, such as buildings and moveable property, and
intangible assets, were transferred
• The value of intangible assets at the time of transfer
• Whether the majority of the business’ employees are taken over by the new employer
• Whether its customers are transferred
• The degree of similarity between the activities carried on before and after the transfer
• The period, if any, for which those activities were suspended
• The court said that no single factor was decisive, national courts had to make an
assessment of the overall position.
• You got two different approaches.
• The labour law approach: similarity of activity: the focus is less on the employer and more
on the similarity between the activity performed by the new employer compare with those
carried out by its predecessor. There was a lot of critique, because this approach
abandoned the flexibility offered by the Spijkers formulation and offended the national
courts which favoured the enterprise organisation approach.
• The commercial approach: economic entity: Süzen case
In this case the court said that, for the directive to be applicable, the transfer had to relate to
a stable economic entity. It continued that the term ‘entity’ referred to an organised grouping
of persons and assets facilitating the exercise of an economic activity which pursues a
specific objective. The court seems to reject the labour law activity test accepted in previous
case law.
• The question was raised how a national court knows whether an economic entity has been
transferred or not.
• The court distinguished between two types of business: those which were asset based and
those which were not.
• Asset-based business: there was a transfer of an understating only where there was a
transfer of significant tangible or intangible assets.
