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Labour and Pensions: Judgement safeguards employees’ rights in the event of a transfer of undertakings

United Kingdom
26/04/1999
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The European Court of Justice has recently made a decision regarding the position of workers in the event of a transfer of undertakings. The Court found that Article 1(1) of Council Directive 77/187/EEC on the approximation of laws in Member States safeguarding employees’ rights in the event of a transfer of undertakings, should be interpreted as meaning that the directive applies where a company in voluntary liquidation transfers all or part of its assets to another company from which the worker then takes his orders, which the company in liquidation states are to be carried out.

Further Article 3(1) of the same Directive does not prevent a worker employed by the transferor at the date of the transfer of an undertaking from objecting to the transfer of his contract of employment with the transferee, provided he chooses to object of his own accord. The national court must then decide whether the contract with the transferee involves a material change in working conditions to the detriment of the worker. If so Article 4(2) of the directive requires Member States to provide that the employer is to be held responsible for the termination.

(Case C-399/96, Judgement 12/11/98, Europièces SA, in liquidation v Wilfriend Sanders, Automotive Industries Holding Company SA, declared insolvent)

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