Until now, according to the Federal Labour Court's Decisions, a business that was transferred during a transfer of a business pursuant to sec. 613a German Civil Code had to maintain its organisational independence in order for a transfer of business to be at hand. This also applied to independent parts of a business. In practice, the transferee often divided once jointly acquired business parts and assigned them to different organisational positions within the transferee's business in order to avoid a transfer of business (and the accompanying transfer of employment relationships). According to a new judgment delivered by the ECJ, a transfer of business can also be at hand if the business loses organisational independence with the transferee, but a "functional link" between the transferred "production factors" is retained.
According to the ECJ's point of view, the interpretation held by the Federal Labour Court until now regarding the transfer of business does not comply with the Directive's purpose of protecting employees. According to the ECJ, this can be derived from Article 1 (1) lit. b of the Directive. This Directive is aimed at the identity of an economic entity in the sense of an organised centralisation of resources for the purpose of carrying out a principal and secondary economic occupation. This definition, however, was not merely aimed at the organisational independence of the transferred entity but, especially in the face of the regulation's purpose, also at the purpose of carrying out a principal and secondary economic occupation. According to this, the Directive would also meet its purpose of providing protection for employees in cases in which the transferee changes the organisation of the transferred entity, while the functional link according to which the transferred production factors interrelate and complement each other, remains intact. The maintaining of such a functional link between the transferred production factors allows the transferee to use these in order to pursue the same or a similar economic activity, even if they are assigned to another organisational structure after the transfer. Therefore, the ECJ's judgment at hand is likely to make it more difficult to avoid a transfer of business in the future in Germany.