Protection of transferred workers’ rights

An employee should not suffer a decrease in his/her salary solely due to the fact that the business concern has been taken over by a new employer, the European Court of Justice has recently affirmed. This is the case even when the person is employed by a public authority which is taken over by another public authority.

EU law safeguards workers’ rights in the eventuality of a transfer of a business concern- Mariosa Vella Cardona

EU law safeguards workers’ rights in the eventuality of a transfer of a business concern or part of it to a new employer. It specifically provides that all the rights and obligations arising from a contract of employment or from an employment relationship with the old employer, as at the date of the transfer, fall upon the new employer. The latter must continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the old employer, until the date of termination or expiry of the collective agreement or the entry into force of another collective agreement.

In this particular case, an employee was employed by an Italian municipality for a number of years as staff of a local authority. She was then transferred onto the list of another public authority. The new employer refused to recognise the 20 years of service given by the employee to the old public authority with the consequence that the employee suffered a substantial reduction in her remuneration.

The employee filed an action before the national tribunal seeking recognition of the whole length of service given. The tribunal, in turn, requested guidance from the European Court of Justice as to whether EU law on the safeguarding of workers’ rights in the event of a transfer of an undertaking applies as well to the takeover by a public authority of staff employed by another public authority. If this is so, the Italian court also requested clarification as to whether, in order to calculate the remuneration of transferred workers, the new employer must take those workers’ length of service with the old employer into account.

The European Court of Justice affirmed that the takeover by a public authority of staff employed by another public authority constitutes a transfer of an undertaking. This is the case if such staff consists in a structured group of employees who are protected as workers in terms of the national law of the member state in question. In so far as the calculation of the remuneration of transferred workers is concerned, the court noted that it is permissible for the new employer to apply, from the date of transfer, the working conditions laid down by the collective agreement in force, including those concerning remuneration.

However, it continued to emphasise that any arrangements chosen for salary integration of the transferred workers must be in conformity with the scope of EU law on protection of the rights of transferred workers. In practice, this means that the transferred employees must not be placed in a less favourable position than before solely because of the transfer.

In this particular case, the court noted that rather than recognising the entire length of service with the previous employer for remuneration purposes, the new employer calculated a ‘notional’ length of service for each transferred worker. The tasks carried out before the transfer by the employee in question, were similar, or even identical, to those carried out by certain staff of the new employer. This means, the court remarked, that the length of service completed by the transferred worker with the old employer could have been easily classified by the new employer as equivalent to that completed by some of its own staff members.

EU laws on the protection of workers’ rights in the eventuality of a transfer of business have been transposed in to Maltese law via the Transfer of Business (Protection of Employment) Regulations. This ruling makes it clear that when interpreting laws regulating the protection of workers’ rights in the eventuality of the takeover of a business, employers must ensure that they respect not only the letter but even the spirit of the law itself.

In its judgment, the court ascertained that, as a general rule, at no point in the course of a takeover of a business concern, must transferred employees be placed in a less advantageous position than they were prior to the transfer, particularly in so far as remuneration is concerned, solely by reason of the fact that a business has been taken over by a new employer.

mariosa@vellacardona.com

Dr Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is the deputy chairman of the Malta Competition and Consumer Affairs Authority as well as a member of the National Commission for the Promotion of Equality.