Five-Month Delay Does Not Preclude Application of EU ‘Acquired Rights Directive’

Precedential Decision by Judiciary or Regulatory Agency

On August 7, 2018, the European Court of Justice ruled that a five-month gap between a music school closing and subsequently opening under new ownership did not preclude application of the Acquired Rights Directive (ARD). The ARD automatically transfers employees from one employer to another when there is a relevant transfer of undertaking. The court ruled that the fact that an undertaking is temporarily closed at the time of the transfer and has no employees may be a relevant factor when assessing if there has been a relevant transfer, but it is not determinative. On these facts, three of the five months were school holidays. Further, because this was an "asset reliant" case (the school and instruments constituted the key ‘undertaking’ being transferred), the fact that the new owners did not take on the old employees did not preclude the existence of a transfer within the meaning of the ARD.

ECJ Rules on What "Undertaking Controlling the Employer" Means for Collective Redundancy Purposes

Precedential Decision by Judiciary or Regulatory Agency

Employers who make collective redundancies are under an obligation to inform, consult, and notify affected employees by virtue of European Directive 98/59, whether the decision to make such redundancies was taken by the employer, or by an undertaking controlling the employer. On August 7, 2018, the Court of Justice of the European Union held that a “controlling undertaking” can be one that controls the employer as a matter of fact, even if they do not exert legal control. For example, it might suffice if the undertaking can exercise genuine influence in terms of voting, despite not holding a majority of votes (perhaps due to low participation by members in meetings). However, a third party that contracts with the employer and terminates that contract, resulting in collective redundancies, would not be considered a controlling undertaking.