Opinion of Advocate General Van gerven
Mr President,
Members of the Court,
1. The Kantongerecht (Cantonal Court), Groningen, has referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a number of questions on the interpretation of Council Directive 77/187/EEC of 14 February 1977 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 businesses (the directive).
Background to the case
2. The Redmond Foundation is a foundation governed by Dutch law which is engaged inter alia in providing assistance to drug addicts, alcoholics and persons addicted to medicinal products from certain minority groups in Dutch society (in particular persons of Surinamese or Antilles, including Áruban, origin). In addition, it also acts as a social and recreational centre for such persons in need of assistance. Its income has always been entirely dependent on subsidies from the Municipality of Groningen, where it is based. The defendants work for the Redmond Foundation. They concluded with it employment contracts governed by private law to which the rules of the Burgerlijk Wetboek (the Civil Code) apply.
3. In late 1990 the Redmond Foundation asked the national court for leave to set aside the employment contracts between it and those members of its staff who had not been taken on by Sigma. It asked for such leave under a provision of Article 1639w of the Civil Code, according to which a change in circumstances may justify setting aside a contract of employment immediately or within a brief period.
4. The national court considers that whether the Redmond Foundation's application to set aside the employment contracts may be granted depends on whether the directive, or Article 1639aa et seq. of the Civil Code based on that directive, apply to the dispute before it. Faced with a question relating to the interpretation of the directive, the national court therefore referred the following questions to the Court for a preliminary ruling:
5. The key question seems to me to be whether the transfer from the Redmond Foundation to Sigma of (part of) the activity of the undertaking and the dismissals of staff related thereto fall within the scope of the directive. That question is in two parts. First, it is necessary to consider whether this case involves a transfer of an undertaking within the meaning of the directive (see sections 11 to 16 below). However, that part of the question is subject to a preliminary question, namely whether the Redmond Foundation is an undertaking within the meaning of the directive (see sections 6 to 10 below). The second part of the question is whether or not there was a legal transfer or a merger within the meaning of the directive (sections 17 to 24 below).
The term undertaking within the meaning of the directive
6. As the Commission rightly observes, the question arises as to whether the Redmond Foundation is in fact an undertaking.
7. Article 1(1) determines the scope of the directive in very general terms:
8. The Court has repeatedly stressed the clearly social objective pursued by the directive. The Court has held that:
9. The emphasis laid on the directive's social aim is important, since in various fields the Court has consistently held that, as a general rule, the term undertaking should be given the most appropriate meaning, having regard to the objective of the Community rules concerned and to their effectiveness. A striking example is afforded by two recent judgments, to which I shall confine myself, namely the judgments in Vandevenne and Höfner and Eher.
10. In the light of the foregoing, it may be stated that, in order to establish whether a given natural or legal person is an undertaking within the meaning of a directive which, like that at issue in these proceedings, pursues a clearly social aim, decisive importance attaches to whether one or more persons have the status of an employee vis-à-vis that natural or legal person under a contract of employment or an employment relationship within the meaning of Article 3(1) of the directive. Unlike the interpretation of the term worker contained in Article 48 of the Treaty, the term employee in this case covers, according to the Court, any person who, in the Member State concerned, is protected as an employee under national employment law.
Transfer of an undertaking within the meaning of the directive
11. The question now is whether a transfer of an undertaking, business or part of a business within the meaning of the directive took place in this case. It appears from the facts described in section 2 above that at least a partial transfer took place. The point at issue between the parties to the main proceedings relates above all to the question whether the undertaking retained its identity in that transfer.
12. In the past, the Court has repeatedly ruled on the need for identity to be maintained in the event of the transfer of an undertaking, business or part of a business within the meaning of the directive.
13. It appears from the facts of the case, in so far as I am aware of them, that a number of factors mentioned by the Court were present in this instance.
14. The ultimate appraisal as to whether, having regard to the facts described above, there has been a continuation, under a new employer, of the same undertaking or at least of a substantial part of the undertaking falls to the national court. As the Court held in the judgment in Spijkers,
15. Accordingly, it is also for the national court to determine the importance to be attached to the circumstance adverted to in the fourth question, according to which Sigma no longer provides the social and recreational services offered by the Redmond Foundation. I would also observe, however, that it is by no means essential for the application of the directive that the undertaking's activity before and after the transfer should be the same. To require this would run counter to the broad scope of the directive and to its wording, according to which, I repeat, both the transfer of a business and of part of a business of an undertaking are covered. It seems to me that, apart from the social and recreational services which are no longer provided, that which remains of the activity of the undertaking can undeniably be described as part of the activity of the Redmond Foundation, which retains its identity.
16. At the hearing, counsel for the Redmond Foundation expanded an argument which does not appear from the national court's questions.
The absence of a legal transfer or a merger
17. It is clear that the prime cause of the transfer to Sigma of the Redmond Foundation's activities was not a takeover agreement. As the national court observes, the transfer was the result of a decision of the Municipality of Groningen to the effect that the Redmond Foundation's subsidy would henceforth be paid to Sigma.
18. In the first place, I would observe that in assessing whether, in a given situation, there has been a transfer resulting from a legal transfer or merger within the meaning of the directive, the Court has invariably started out from the premiss that that question has to be considered in the light of the final outcome of the transaction in question. According to the Court, the directive is applicable
19. In keeping with this approach, the Court has systematically given a very broad interpretation to the expression legal transfer. Striking illustrations are to be found in the judgments in Berg, Daddy's Dance Hall and Bork International.
20. Those examples show that the Court does in fact give a very broad meaning to the expression legal transfer. It is sufficient for the transfer to occur on the basis of a contract, even if, as the Court held in the passage from Berg quoted in section 19, the transfer — in that case a retransfer — originates in a termination which results from an agreement between the contracting parties or a unilateral declaration by one of them or indeed a judicial decision. According to the judgments in Daddy's Dance Hall and Bork International, it is not even necessary for there to have been an agreement between the transferor and the ultimate transferee.
21. Did the transfer from the Redmond Foundation to Sigma occur on such a (broad) contractual basis?
22. In the light of this, it seems highly significant to me that, according to the first of the questions submitted for a preliminary ruling, the national court finds that it was
23. To my mind, the existence of such a contractual basis is not undermined by the objections made to it by the Redmond Foundation. This applies in the first place to the Redmond Foundation's objection to the effect that the negotiations which took place between itself and Sigma with regard to the organization of assistance after 1 January 1991 came to naught. First, that argument does not detract from the existence of the aforementioned agreement in principle to cooperate with a view to transferring the provision of services. Secondly, it merely confirms that consultations on the transfer actually did take place between the parties (presumably within the aforementioned working party). The fact that those consultations did not result in an agreement on each specific point does not call in question the overall context in which they took place, namely an intention, based on mutual agreement, to cooperate on the transfer of the undertaking.
24. Even if the Court were to consider that there was no transfer of an undertaking resulting from a legal transfer in this case, that would not necessarily mean that the directive did not apply in this case.
Conclusion
25. I propose that the Court should answer the national court's questions as follows:
1 Original language: Dutch.
2 OJ 1977 L 61, p. 26.
3 For the relevant part of the provision, see the Report for the Hearing.
4 Civil Code, Article 285(3). See, in particular, Asser/Van der Grinten: De rechtspersoon, Volume II of Asser's handleiding tot de beoefening van het Nederlands burgerlijk recht, Zwolle, Tjeenk Willink, 1986, section 471, pp. 347-349.
5 See in this connection inter alia V. A. M. Van der Burg, De onderneming in het stichtingsgewaad, in Van vennootschappelijk belang (Maeijerbundel), Zwolle, Tjeenk Willink, 1988, p. 21 et seq.; Dijk/Van der Ploeg, Van vereniging, coöperatie en stichting, Arnhem, Gouda Quint, 1991, p. 13. The use of foundations in connection with groups in this connection appears inter alia from the numerous purchasing and sales centres set up as foundations, research foundations, foundations involved in implementing the rules on competition, foundations operating as administrative offices in connection with the certification of shares in public limited companies (whereby the foundation holds the shares and issues certificates to the former shareholders) and the placing of shares in a foundation by large shareholders without successors with a view to ensuring the continuity of the undertaking: W. J. Slagter, Compendium van het ondernemingsrecht, Deventer, Kluwer, 1990, p. 335.
6 See the first and second recitals in the preamble to the directive.
7 Judgment in Case 135/83 Abels v Bedrijfsvereniging voor de Metaalindustrie en de Electrotechnische Industrie f 1985] ECR 469, paragraph 18 in fine.
8 Judgment in Case C-362/89 D'Urso [1991] ECR I-4105, paragraph 23.
9 It was announced in the Council Resolution of 21 January 1974 concerning a social action programme (OJ 1974 C 13, p. 1, more specifically at p. 4).
10 Second recital in the preamble to the directive.
11 Fifth recital in the preamble (OJ 1977 L 61, p. 26); see also in this connection the judgment in Abels, cited above, paragraph 18.
12 Judgments in Case 287/86 Ny Mølle Kro [1987] ECR 5465, paragraph 12, in Case 324/86 Tellerup v Daddy's Dance HaII[1988] ECR 739, paragraph 9, in Joined Cases 144 and 145/87 Berg v Besselsen [1988] ECR 2559, paragraph 12, in Case 101/87 Bork International v Foreningen af Arbejdsledere i Danmark [1988] ECR 3057, paragraph 13, and in D'Urso, cited above, paragraph 9.
13 Judgments in Berg, paragraph 13, and D'Uno, paragraph 9.
14 Judgment in Ny Mølle Kro, paragraph 11; and see the earlier judgment in Case 19/83 Wendelboe [1985] ECR 457, paragraph 15, and Berg, cited above, paragraph 13.
15 OJ 1985 L 370, p. 1.
16 Judgment in Case C-7/90 Vandevenne [1991] ECR I-4371, paragraph 6.
17 Judgment in Case C-41/90 Höfner and Eher [1991] ECR I-1979, paragraph 21.
18 See, inter alia, the judgments in Case 66/85 Lawrie-Blum [1986] ECR 2121, paragraph 17, in Case 197/86 Brown [1988] ECR 3205, paragraph 21, in Case 344/87 Bettray [1989] ECR 1621, paragraph 12, and in Case C-3/90 Bernini [1992] ECR I-1071, paragraph 14.
19 Judgments in Case 105/84 Danmols Inventar [1985] ECR 2639, paragraph 28, and in Case 237/84 Commission v Belgium [1986] ECR 1247, paragraph 13.
20 Judgments in Case 24/85 Spijkers v Benedik [1986] ECR 119, paragraphs 11 and 15, and in Ny Mølle Kro, cited above, paragraph 18.
21 Judgments in Spijkers, paragraph 12, and in Ny Mølle Kro, paragraph 18.
22 Judgment in Spijkers, paragraph 13. The Court reiterated a number of those factors in tne judgment in Bork International, paragraph 15.
23 This appears from paragraph 4 of the judgment.
24 Judgment in Spijkers, paragraph 14.
25 According to the Court, in order to determine whether the employees were dismissed for those reasons or solely as a result of the transfer, it is necessary to take into consideration the objective circumstances in which the dismissal took place: judgment in Bork International, paragraph 18.
26 See, expressly, the judgment in Case 139/85 Kempf [1986] ECR 1741, paragraph 12.
27 Judgment in Danmols Inventar, cited in footnote 18, para* graph 10.
28 Judgments in Ny Mølle Kro, paragraph 12, Daddy's Dance Hau, paragraph 9, and Berg, paragraph 17.
29 In particular the German (vertragliche Übertragung), French (cession conventionnelle), Greek (συμβατική εκχώρηση), Italian (cessione contrattuale) and Dutch (overdracht krachtens overeenkomst): see the judgment in Abels, paragraph 11.
30 Paragraph 13. More specifically with regard to the question referrea for a preliminary ruling, the Court added that the meaning of the provision had to be clarified in the light of its place in the system of Community law in relation to the rules on insolvency, ibid.
31 Judgment in Berg, paragraph 19.
32 Judgment in Daddy's Dance Hall, paragraph 10; cf. paragraph 14 of the judgment in Bork International.
33 See the three judgments in Case 41/69 A CF Chemiefarma v Commission [1970] ECR 661, paragraph 112, in Case 44/69 Buckler v Commission [1970] ECR 733, paragraph 25, and in Case 45/69 Boehringer v Commission [1970] ECR 769, paragraph 28.
34 See also section 11 of my Opinion in Case C-279/87 Tipp-Ex v Commission [1990] ECR I-261 (summary publication, opinion not published in the ECR).
35 See also as regards the need for an overall view of the contractual relationship between the parties, section 8 of my Opinion in Case C-277/87 Sandoz v Commission [1990] ECR I-45 (summary publication, Opinion not published in the ECR).
36 Thus, in order for there to be an agreement within the meaning of Article 85(1) of the Treaty, it is not necessary for it to constitute a valid and binding contract under national law: judgment in Case C-277/87 Sandoz v Commission [1990] ECR I-45 (summary publication), at the end of paragraph 2 of the summary of the judgment; see also the judgment in Joined Cases 209/78 to 215/78 and 218/78 Van Landewyck v Commission [1980] ECR 3125, paragraphs 85 and 86.
37 For definitions coming under company law and revenue law, respectively, see Articles 3(1) and 4(1) of the Third Council Directive 78/855/EEC of 9 October 1978 based on Article 54(3)(g) of the Treaty concerning mergers of public limited companies (OJ 1978 L 295, p. 36) and Article 2(l)(a) of Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States (OJ 1990 L 225, p. 1).
38 First recital in the preamble to the directive.
39 OJ 1989 L 395, p. 1.