In the event of a transfer of undertakings, the transferor's collective bargaining agreements continue to apply to the employees being transferred if the other employer (ie, the transferee) has no such collective agreement in place; otherwise, the transferor's collective bargaining agreement is replaced immediately and entirely by the transferee's agreement, even if the latter is less favourable to the employees concerned.

In a recent case an employee who was transferred to another employer as a result of a bank merger claimed that the normative rules and system of remuneration provided by the transferor should continue to apply in respect of his supplementary pension scheme arrangements and health insurance (which also covered his family).

Confirming the Court of Appeal's decision, the Supreme Court(1) dismissed the claim. Applying Article 2112 of the Civil Code, it stated that in the event of a merger, the transferee's collective bargaining agreement applies to employees of the undertaking to be transferred, except where the transferee has no such agreement in place. However, the previous agreement will continue to apply in respect of the employees' intangible rights.

The court followed previous decisions(2) in finding that Article 2112 provides for an employee's integration into a different organisation, in which other normative rules and a particular remuneration and benefits framework apply. Consequently, the transferee's collective bargaining arrangements apply to the transferred employees. However, this finding is consistent with the carry-over of different collective agreements where it is clear that less favourable contractual conditions would apply to intangible rights.(3)

The decision is significant because it affirms a central principle of the transfer of undertakings as it applies to pension contributions and medical insurance policies.(4) In this context, employers should remember that the EU Transfer of Undertakings Directive (2001/23/EC) states that:

"unless member states provide otherwise, Paragraphs 1 and 3 shall not apply in relation to employees' rights to old age, invalidity or survivors' benefits under supplementary company or inter-company pension schemes outside the statutory social security schemes in member states."

For further information on this topic please contact Andrea Stanchi at Stanchi Studio Legale by telephone (+39 02 546 9522), fax (+39 02 551 91641) or email ([email protected]).


(1) Decision 10614, May 13 2011.

(2) Decisions 5882/10 and 2609/08.

(3) Decision 19654/06.

(4) Decision 21234/07.