| | L77.187-a1.1Safeguarding of employees' rights in the event of transfers of undertakings    
Article 7.1: Field of application| Case | Pte | Ref | Text | C-172/99
Liikenne | 19-23 | S2-3.2-impl
L77.187-1.1 | 19 It must be recalled that the aim of Directive 77/187 is to ensure continuity of employment relationships within an economic entity, irrespective of any change of ownership. The fact that the activity carried on by such an entity is awarded successively to different operators by a public body cannot exclude the application of Directive 77/187, if passenger transport by bus does not involve the exercise of public authority (see, to that effect, Joined Cases C-173/96 and C-247/96 Sanchez Hidalgo and Others [1998] ECR I-8237, paragraphs 21 and 24).
20 The Court has thus held that Directive 77/187 may apply to a situation in which a public body which has contracted out its home-help service for persons in need or awarded a contract for the surveillance of some of its premises to one undertaking decides, on expiry or after termination of its contract with that undertaking, to contract out that service or award that contract to another undertaking (Sanchez Hidalgo, paragraph 34).
21 That conclusion cannot be challenged on the ground that the contract for bus transport in question was awarded following a public procurement procedure conducted in accordance with Directive 92/50. Directive 77/187 does not provide for any such exception to its scope, nor does Directive 92/50 contain any provision to that effect. So the circumstance that a transaction comes under Directive 92/50 does not of itself rule out the application of Directive 77/187 (see, similarly, the advisory opinions of the EFTA Court in Case E-2/95 Eidesund v Stavanger Catering A/S, Report of the EFTA Court 1 July 1995 31 December 1996, p. 1, paragraph 50, and Case E-3/96 Ask and Others v ABB Offshore Technology AS and Aker Offshore Partner AS, Report of the EFTA Court 1997, p. 1, paragraph 33).
22 The fact that the provisions of Directive 77/187 may in certain cases be applicable in the context of a transaction which comes under Directive 92/50 cannot be seen as calling into question the objectives of the latter directive. Directive 92/50 is not intended to exempt contracting authorities and service providers who offer their services for the contracts in question from all the laws and regulations applicable to the activities concerned, in particular in the social sphere or that of safety, so that offers can be made without any constraints. The aim of Directive 92/50 is that, in compliance with those laws and regulations and under the conditions it lays down, economic operators may have equal opportunities, in particular for putting into practice their rights of freedom of establishment and freedom to provide services.
23 In such a context, operators retain their room to manoeuvre and compete with one another and submit different bids. In the field of passenger transport by scheduled bus services they may, for instance, adjust the standard of facilities of the vehicles and their performance in terms of energy and ecology, the efficiency of the organisation and methods of contact with the public, and, as with any undertaking, the profit margin desired. An operator who makes a bid must also be able to assess whether, if his bid is accepted, it will be in his interests to acquire significant assets from the present contractor and take over some or all of his staff, or whether he will be obliged to do so, and, if so, whether he will be in a situation of a transfer of an undertaking within the meaning of Directive 77/187. | C-172/99
Liikenne | 27-43 | S2-general
L77-187-1.1 | 27 The test for establishing the existence of a transfer within the meaning of Directive 77/187 is whether the entity in question retains its identity, as indicated inter alia by the fact that its operation is actually continued or resumed (Case 24/85 Spijkers [1986] ECR 1119, paragraphs 11 and 12, and Case C-234/98 Allen and Others [1999] ECR I-8643, paragraph 23).
28 While the absence of any contractual link between the transferor and the transferee or, as in this case, between the two undertakings successively entrusted with the operation of bus routes may point to the absence of a transfer within the meaning of Directive 77/187, it is certainly not conclusive (Case C-13/95 Süzen [1997] ECR I-1259, paragraph 11).
29 Directive 77/187 is applicable wherever, in the context of contractual relations, there is a change in the natural or legal person responsible for carrying on the business and entering into the obligations of an employer towards employees of the undertaking. Thus there is no need, in order for that directive to be applicable, for there to be any direct contractual relationship between the transferor and the transferee: the transfer may take place in two stages, through the intermediary of a third party such as the owner or the person putting up the capital (see, inter alia, Joined Cases C-171/94 and C-172/94 Merckx and Neuhuys [1996] ECR I-1253, paragraphs 28 to 30, and Süzen, paragraph 12).
30 Directive 77/187 can therefore apply where there is no direct contractual link between two undertakings successively awarded a contract, following procedures for the award of public service contracts in accordance with Directive 92/50, for a non-maritime public transport service, such as the operation of scheduled local bus routes, by a legal person governed by public law.
31 For Directive 77/187 to be applicable, however, the transfer must relate to a stable economic entity whose activity is not limited to performing one specific works contract (Case C-48/94 Rygaard [1995] ECR I-2745, paragraph 20). The term entity thus refers to an organised grouping of persons and assets facilitating the exercise of an economic activity which pursues a specific objective (Süzen, paragraph 13).
32 It is for the national court to establish if necessary, in the light of the guiding factors set out above, whether the operation of the bus routes at issue in the main proceedings was organised as an economic entity within Hakunilan Liikenne before being entrusted to Liikenne.
33 However, to determine whether the conditions for the transfer of an economic entity are satisfied, it is also necessary to consider all the factual circumstances characterising the transaction in question, including in particular the type of undertaking or business involved, whether or not its tangible assets such as buildings and movable property are transferred, the value of its intangible assets at the time of the transfer, whether or not the core of its employees are taken over by the new employer, whether or not its customers are transferred, the degree of similarity between the activities carried on before and after the transfer, and the period, if any, for which those activities were suspended. These are, however, merely single factors in the overall assessment which must be made, and cannot therefore be considered in isolation (see, in particular, Spijkers, paragraphs 13, and Süzen, paragraph 14).
34 So the mere fact that the service provided by the old and the new contractors is similar does not justify the conclusion that there has been a transfer of an economic entity between the two undertakings. Such an entity cannot be reduced to the activity entrusted to it. Its identity also emerges from other factors, such as its workforce, its management staff, the way in which its work is organised, its operating methods or indeed, where appropriate, the operational resources available to it (Süzen, paragraph 15, Sanchez Hidalgo, paragraph 30, and Allen, paragraph 27; see also Joined Cases C-127/96, C-229/96 and C-74/97 Hernandez Vidal and Others [1998] ECR I-8179, paragraph 30).
35 As pointed out in paragraph 32 above, the national court, in assessing the facts characterising the transaction in question, must take into account among other things the type of undertaking or business concerned. It follows that the degree of importance to be attached to the various criteria for determining whether or not there has been a transfer within the meaning of the directive will necessarily vary according to the activity carried on, and indeed the production or operating methods employed in the relevant undertaking, business or part of a business (Süzen, paragraph 18, Hernandez Vidal, paragraph 31, and Sanchez Hidalgo, paragraph 31).
36 On this point, the Commission submits, referring to Süzen, that the absence of a transfer of assets between the old and new holders of the contract for bus transport is of no importance, whereas the fact that the new contractor took on an essential part of the employees of the old contractor is decisive.
37 The Court has indeed held that an economic entity may, in certain sectors, be able to function without any significant tangible or intangible assets, so that the maintenance of the identity of such an entity following the transaction affecting it cannot, logically, depend on the transfer of such assets (Süzen, paragraph 18, Hernandez Vidal, paragraph 31, and Sanchez Hidalgo, paragraph 31).
38 The Court thus held that, since in certain sectors in which activities are based essentially on manpower a group of workers engaged in a joint activity on a permanent basis may constitute an economic entity, it must be recognised that such an entity is capable of maintaining its identity after it has been transferred where the new employer does not merely pursue the activity in question but also takes over a major part, in terms of their numbers and skills, of the employees specially assigned by his predecessor to that task. In those circumstances, the new employer takes over an organised body of assets enabling him to carry on the activities or certain activities of the transferor undertaking on a regular basis (Süzen, paragraph 21, Hernandez Vidal, paragraph 32, and Sanchez Hidalgo, paragraph 32).
39 However, bus transport cannot be regarded as an activity based essentially on manpower, as it requires substantial plant and equipment (see, reaching the same conclusion with respect to driveage work in mines, Allen, paragraph 30). The fact that the tangible assets used for operating the bus routes were not transferred from the old to the new contractor therefore constitutes a circumstance to be taken into account.
40 At the hearing, the representative of the defendants in the main proceedings emphasised the economic value of the contract between the contracting authority YTV and Liikenne, and submitted that this was a significant intangible asset. That value cannot be denied; but in the context of an award which is to be renewed, the value of such an intangible asset in principle falls to nil on the expiry of the old contract, since the award is necessarily thrown open again.
41 If an award procedure such as that at issue in the main proceedings provides for the new contractor to take over the existing contracts with customers, or if the majority of the customers may be regarded as captive, then it should nevertheless be considered that there is a transfer of customers.
42 However, in a sector such as scheduled public transport by bus, where the tangible assets contribute significantly to the performance of the activity, the absence of a transfer to a significant extent from the old to the new contractor of such assets, which are necessary for the proper functioning of the entity, must lead to the conclusion that the entity does not retain its identity.
43 Consequently, in a situation such as that in the main proceedings, Directive 77/187 does not apply in the absence of a transfer of significant tangible assets from the old to the new contractor. |
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