The European Acquired Rights Directive (ARD) was introduced with one main objective - to safeguard workers' rights in the event of the transfer of an undertaking.

The European Court of Justice (ECJ) has just decided in Celtec Ltd v Astley that even if the transfer takes place over a long period, the relevant date is the one on which responsibility as the employer transfers from the transferor to the transferee.

 

What were the basic facts?

The three claimants were all civil servants employed by the Department of Employment in local area offices in Wales. In 1989 some of their youth training responsibilities were transferred to private Training and Enterprise Councils (TECs). It took until 1991 for all the TECs to become operational.

The Wrexham local area office was taken over by the North East Wales TEC (Newtec) and started operating in September 1990. On 1 April 1997, Newtec merged with another local TEC to form Celtec.

The three claimants were seconded for three years to Newtec, at the end of which they decided to resign from the civil service and become employees of Newtec in 1993. None of them had a break in service.

In 1998, Ms Hawkes was dismissed by Celtec. It refused to recognise that she had continuity of service from the date on which she joined the civil service in 1986. The other two claimants - Mr Astley and Ms Hawkes - were worried that the same thing would happen to them and they asked the same tribunal to decide their length of service as well.

 

What did the National Courts decide?

The tribunal said that there had been a transfer of an undertaking, and that the three former civil servants had continuity of employment from the date they joined the civil service.

This was overturned by the appeal tribunal because the transfer of the undertaking was completed in September 1990, three years before the three claimants became employees of Newtec.

The Court of Appeal then quashed that decision. It said that the ARD could cover a transfer that took place over several years. The House of Lords took up the cudgels and asked the ECJ to decide the following questions:

  1. Do the words in article 3(1) of the directive "on the date of a transfer", refer to a particular point in time when the transfer is deemed to have been completed?
  2. If yes, how can that point in time be identified?
  3. If no, how should the words be interpreted?

 

What did the ECJ decide?

The Court answered the first two questions as follows:

  1. Article 3(1) of the directive must be interpreted as meaning that the date of a transfer is the date on which responsibility for carrying on the business transferred moves from the transferor to the transferee. That date is a particular point in time which cannot be changed by the transferor or transferee.
  2. Contracts of employment or employment relationships existing on the date of the transfer between the transferor and the workers assigned to the undertaking transferred are deemed to be handed over, on that date, from the transferor to the transferee.
    Because of the answers to the first two questions, the Court did not need to answer the third.

 

Comment

The ECJ has therefore made clear that the "date of a transfer" refers to a particular point in time in the transfer process and not to the length of time over which that process extends.

However, it did not make clear how that point in time should be identified. Given the circumstances in this case, the House of Lords still has some unravelling to do.