Albron Catering BV v FNV Bondgenoten and John Roest
The Acquired Rights Directive is the European directive that governs the transfer of undertakings legislation. In Albron Catering BV v FNV Bondgenoten and John Roest, the European Court of Justice (ECJ) said that if there are two employers within a group of companies, the transferor can be the employer responsible for the economic activity of the entity transferred although it has no contractual relationship with the affected employees.
Heineken International employed all its staff through a service company Heineken Nederlands Beheer BV (HNB) which then assigned staff to the various operating companies in the group.
Mr Roest worked in the catering department of Heineken Nederland (HN), which provided catering for staff on various company sites until it was sold to Albron on 1 March 2005. Supported by his union FNV, Mr Roest brought an action in the cantonal court for a declaration that this constituted the transfer of an undertaking.
Albron argued that the Acquired Rights Directive did not apply because Dutch law requires the employee to be employed by the transferor. As it had bought the catering function from HN and not HNB, the Directive did not apply and Mr Roest’s contract of employment had not transferred over.
A Dutch court, however, agreed with Mr Roest. Albron appealed to the Dutch Court of Appeal which referred a number of questions to the ECJ.
Article 3(1) of the Acquired Rights Directive states that “the transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee”.
Emphasising that the purpose of the legislation was to protect employees in the event of a change of employer, the ECJ agreed with Mr Roest.
It said that because article 3(1) required either an employment contract or an employment “relationship” at the date of transfer, it was not always necessary to have a contractual link with the transferor for employees to be protected.
Nor was it apparent from the Directive that the connection between the contract and the “relationship” was one of subsidiarity and that where there was more than one employer, “the contractual employer must systematically be given greater weight”.
The Directive did not therefore prevent the non-contractual employer (in this case HN) from being regarded as a ‘transferor’, within the meaning of the Directive.
It then went on to say that, as the Directive presupposes a change in the person “responsible for the economic activity of the entity transferred”, it follows that a contractual employer (who is not responsible for the activity) “cannot systematically take precedence, for the purposes of determining the identity of the transferor, over the position of a non-contractual employer who is responsible for that activity”.
The ECJ concluded therefore that, if there are two employers within a group of companies (one which has contractual relations with the employees and the other which does not), the transferor can be the employer responsible for the economic activity of the entity transferred although it has no contractual relationship with the affected employees.
This is a welcome decsion from the ECJ. Had it held that the staff concerned had not been transferred, this would no doubt have encouraged other groups of companies to follow suit.