It is common for corporate groups to have a special 'personnel' company whose sole purpose is to act as the employer for the entire group and to second its employees to the other group companies. Pursuant to the Transfer of Enterprises Act (which implements the European directive on the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses), where an undertaking or business is transferred in whole or in part to a third party, the transferor's rights and obligations arising from contracts of employment or employment relationships existing on the date of transfer are transferred by operation of law to the transferee. In other words, employees of the transferor automatically become employees of the transferee on the same employment conditions. Up to now the protection afforded by this rule has been held to not apply to employees who have been seconded to the transferor. These employees are usually offered the opportunity to become employees of the transferee on a voluntary basis but on different employment conditions.
Preliminary question in Heineken case
In a case involving the outsourcing of catering activities by the Heineken group, doubts have been raised about the above rule. In view of the purpose of the European directive in question - the safeguarding and in particular the preservation of employees' rights in the event an enterprise is transferred - the Amsterdam Court of Appeal has submitted a preliminary question to the European Court of Justice in the Heineken case. In short, the question submitted is whether the directive must be interpreted to mean that only the transferor's obligations towards its own employees pass automatically to the transferee or whether this protection also extends to those who are employed by a special group company set up for this purpose and seconded to the transferor. We will inform you further as soon as the European Court of Justice answers this question.