ACQUIRING RIGHTS

Jouini and ors v Princess Personal Services GMBH

The European Acquired Rights Directive (ARD) says that the rights of employees must be protected when the undertaking for which they work is transferred in certain circumstances. In Jouini and ors v Princess Personal Services GMBH (IRLR 2007, 1005; IDS 841), the European Court of Justice (ECJ) said that the directive can apply to the transfer of temporary workers from one employment agency to another, if they are doing the same work for the same client.

Basic facts

Mayer and Co was an employment agency, run and owned by a husband and wife team. After running into financial difficulties, one of their main clients suggested that the couple set up another agency to look after their specific needs.

The couple duly set up and became directors of Princess Personal Service (PPS) in 2002. They encouraged 40 of its temporary employees seconded to that client to transfer over to the new agency, which they did on 1 December 2002. These workers continued to do the same work as before.

PPS then took over other clients of Mayer (and the employees assigned to them) as well as about one third of the staff who had worked for Mayer, which subsequently went into insolvency.

Mr Jouini and other temporary workers claimed that, as there had been a transfer, PPS owed them outstanding salary that Mayer had failed to pay them. For its part, PPS argued that there had not been a transfer, nor did it have a contract with Mayer making it liable.

Decisions of national courts

The two national courts held that there had been a transfer of part of the business in accordance with the Austrian law that implemented the ARD.

PPS appealed to Austria’s supreme court, arguing that there could not have been a transfer because there was no stable economic entity to transfer over.

The supreme court then asked the ECJ to decide whether the directive could apply to a business where most of its employees were assigned to work for someone else, and were therefore not integrated into its own business.

ECJ decision

The ECJ said that for ARD to apply, there just had to be a stable economic entity that had retained its identity. It also noted that the technical concept of a 'legal transfer' should be a flexible one covering a written or oral agreement between the parties. That could include a tacit agreement that resulted from a degree of cooperation between them.

In this case, it said there was clearly an intention by Mayer and PPS to transfer the relevant employees from one to the other. The fact that there had been no written or oral contract between the two agencies dealing with the transfer of a business was not relevant.

But had an economic entity been transferred? The ECJ noted that an entity can consist of just the labour force. As employment agencies were clearly included within the scope of the directive, it said that their “special characteristics” then had to be considered when analysing whether there had been a transfer.

It held that just because the employees were assigned as temporary workers to clients of the agency and integrated within their structures (as opposed to those of the agency) did not mean that there could not be an economic entity to transfer. In fact, the ARD specifically provides that temporary workers are not to be excluded from its protection.

On the contrary, the workers represented essential “assets” without whom PPS could not function. On top of that, they had been in a working relationship with Mayer and paid by the company directly. That confirmed their connection with that business and their contribution to the existence of an economic entity.

The ECJ therefore concluded that the directive “must be interpreted as applying to a situation where part of the administrative personnel and part of the temporary workers are transferred to another temporary employment business in order to carry out the same activities in that business for the same clients.”