The Acquired Rights Directive (introduced to protect the rights of employees transferred from one undertaking to another) is the focus in the case of Johanna Maria Boor, née Delahaye v Ministre de la Fonction Publique et de la Réforme Administrative.

The European Court of Justice (ECJ) has said that the directive does not protect the pay of employees transferred from the private to the public sectors, if there are public sector rules that apply.

However, if this results in a substantial reduction in pay, the employee can terminate the contract on the basis that it is for a 'transfer-related reason.'

What were the facts?

Mrs Boor was an employee of a private, not for profit organisation, Foprogest, which helped the unemployed in Luxembourg back into work. The state decided to take on these functions itself, and with effect from 1 January 2000, Mrs Boor became a public sector employee on a contract governed by pay scales set by national law.

Unfortunately for her, she was classified in the first grade of the salary scale (with no allowance for length of service) which meant that she lost 37 per cent of her monthly salary.

The transfer was governed by the acquired rights directive (adopted into Luxembourg legislation by the Loi du 24 mai 1989). The national court asked the ECJ to decide two basic issues: 

  • was the state obliged to maintain all the rights of its new employees (including their pay) that they had enjoyed before the transfer, or
  • could it substitute the rules on compensation applicable to its own employees? 
    The basic question facing the ECJ, therefore, was whether the acquired rights directive precluded the state from relying on national rules to reduce the pay of the transferred employees.

What did the ECJ decide?

The court clarified, first of all, that the directive applies to a transfer of an employee from the private to the public sector. It said that the only transfers to be excluded were those involving reorganisations of structures within the public sector, or the transfer of administrative functions between different public authorities.

It then made clear that although the transferor's rights and obligations are transferred to the transferee under the directive, there was an anomaly where the transfer was from the private to the public sector.

It said that, in those circumstances, the directive allowed the state to rely on national rules governing public employees to reduce the amount of pay of its new employees. 
However, it then went on to say that 'if such a calculation led to a substantial reduction in the employee's remuneration, that would constitute a substantial change in working conditions to the detriment of the employees concerned by the transfer, so that the termination of their contracts of employment for that reason must be regarded as resulting from the action of the employer'.

Comment

What does this all mean? Basically, the court seems to be saying that if an employee is dismissed or decides to resign and complains of constructive dismissal following a substantial reduction in salary, the dismissal will be for a transfer-related reason. And that would make it unfair, if the case was brought in the UK.

However, the ruling also seems to suggest that there is nothing to prevent a public sector employer from reducing someone's salary if this is required by national rules for public employees.

This decision is very specific to legislation that applies to Luxembourg and should not be interpreted as applying to other EU countries, including the UK, where public sector workers' terms and conditions are not directly set by legislation.