Employees' Financial Rights In The Case Of A Transfer Of An Undertaking: The Interpretation Of Article 3 Of The Transfers Of Undertakings Directive 2001/23/EC Provided By The European Court Of Justice

On the 6th April 2017, in the case C-336/15, the European Court of Justice ("ECJ") provided an interpretation of article 3 of the Transfers of Undertakings Directive 2001/23/EC, with respect to the safeguarding of employees' financial rights in the event of a transfer of undertaking.

The case submitted to the ECJ involved four employees, who were members of a Swedish trade union. When the employees were transferred to the new employer ISS Facility Services AB (hereinafter referred to as "ISS" or "the transferee"), the transferors, that is, Apoteket AB and AstraZeneca AB, were bound by collective agreements. Under these collective agreements, the period of notice was to be extended by a period of six (6) months, in relation to employees who at the time of termination on grounds of redundancy, are aged between 55 and 64 years and have a continuous period of service of 10 years. When the transfer and subsequent termination of the employment of the employees took place, the employees were 55 years of age or older and had been employed with the transferors for a period exceeding ten (10) years.

However, when the said employees were terminated on grounds of redundancy by ISS, the transferee did not grant them a period of notice extended by 6 months since, according to ISS, the employees did not have a continuous period of service of 10 years with ISS, and, for that reason, the employees did not satisfy the conditions which granted the extension of the notice period in terms of the applicable collective agreements.

The Swedish trade union brought the action before the ECJ claiming that ISS should compensate the employees for the loss sustained by the transferee's failure to give the said employees adequate notice.

The case raised the question of the interpretation of the above-mentioned Article 3.

The ECJ, in accepting the Swedish trade union's arguments...