WRITTEN QUESTION E-3806/00

by Stephen Hughes (PSE) to the Commission

(7 December 2000)

Subject: Safeguarding employees' rights in the event of transfers of undertakings

Is it possible that Directive 77/187/EEC(1), as amended by Directive 98/50/EC(2), on safeguarding employees' rights in the event of transfers of undertakings could apply in the case that, following a tender procedure, there was a change of contractor with respect to a contract for the provision of a crèche, on the assumption that the crèche in question fulfilled the criteria for it to be considered an economic entity retaining its own identity?

If it were the case that the Directive were deemed to apply; how would its application be made compatible with the principles of non-discrimination in public procurement procedures set out in Directive 92/50/EEC(3) on public service contracts?

If it were the case that the Directive was applicable but was not in fact applied, what redress would employees of the transferor have, and against which party?

(1) OJ L 61, 5.3.1977, p. 26.

(2) OJ L 201, 17.7.1998, p. 88.

(3) OJ L 209, 24.7.1992, p. 1.

Answer given by Mrs Diamantopoulou on behalf of the Commission

(9 February 2001)

The question relates to 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, as amended by Council Directive 98/50/EC of 29 June 1998, and whether it applies in the event that, following a tender procedure, there was a change of contractor with respect to a contractor for the provision of a crèche, on the assumption that the crèche in question fulfilled the criteria for it to be considered an economic entity retaining its own identity.

If the transfer of activities involves the precise conditions mentioned above, the answer is yes. Under the consistent case law of the Court of Justice, the decisive criterion for the existence of a transfer within the meaning of Directive 77/187/EEC is whether the entity in question retains its identity following the transfer. The Court's opinion is that identity is maintained if the transferee pursues the same economic activity and if all the resources necessary to pursue the activity in question are transferred. Of course, the conditions of application of the Directive are assessed on a case-by-case basis; all of the circumstances in each situation must be examined in order to determine whether the conditions for the transfer of an entity are actually met.

The Honourable Member also asks how the application of Directive 77/187/EEC as amended would be made compatible with the principles of non-discrimination in public procurement procedures set out in Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts.

It should be explained that the central objective of Directive 77/187/EEC as amended is to safeguard employees' rights in the event of a transfer resulting from a legal transfer or merger bringing about a change of employer. Once the objective conditions for application of the Directive are met, the provisions protecting employees' rights come into play regardless of the actual manner of transfer of activity. The fact that the transfer follows a procedure for the award of a public service contract in no way affects the application of Directive 77/187/EEC. The aim of Directive 92/50/EEC is not to allow economic entities to be taken over at the expense of employees' rights, but to ensure that there is a level playing field for service providers wishing to compete for the award of a particular contract. The aim of this Directive is essentially to guarantee that the competition rules applied are the same for all economic operators, but in no way does it require Member States to contravene employees' rights(1). Moreover, it should be noted that the provision of a crèche constitutes a service within the meaning of Annex I B of the Directive, which provides for a restricted system for the award of a contract.

Finally, claims for redress for employees whose rights may have been ignored may be brought before the national courts according to the conditions set out in the Member States' legislation.

(1) See the Opinion of Mr Advocate General Philippe LÉGER in case C-172/99.