Court of Appeal of Amsterdam, 25 October 2011, LJN: BU1290
The personnel company Heineken Nederlands Beheer B.V. employs about 70 catering employees. The employees are seconded on a permanent basis to Heineken Nederland B.V. One day Heineken Nederland B.V. decided to outsource the catering activities to Albron B.V., which did employ the employees, but on considerably worse employment conditions.
The catering employees took the position that the outsourcing falls under the Directive on 'transfer of undertakings', so that their employment contracts have automatically passed to Albron. Albron, on the other hand, thought that there was no transfer of undertaking because the employees were not in the service of Heineken Nederland B.V., which has transferred the catering activities to Albron. The employees were in the service of a separate personnel company.
Eventually, the case was brought before the Amsterdam Court of Appeal ('the Court of Appeal'). The Court of Appeal struggled with the interpretation of the concept of 'employer' and asked the European Court of Justice ('the ECJ') to provide an explanation. The ECJ considered that the group company to which the employees were de facto assigned on a permanent basis, without however being linked to the latter by a contract of employment, may also be regarded as a 'transferor' within the meaning of the Directive. The case was then referred back to the Court of Appeal.
Judgment of the Court of Appeal
The Court of Appeal arrived at the opinion that the ECJ's interpretation of the concept of employer is not contrary to current Dutch legislation, and therefore concluded that the outsourcing at issue should be regarded as a transfer of undertaking within the meaning of the Directive. As a consequence, Albron is obliged to pay the wages in arrears starting from the time of the transfer, plus the statutory interest. Besides, Albron must apply the conditions of employment that were in place between the catering employees and Heineken Nederlands Beheer B.V. with retroactive effect.
With respect to the applicable collective agreement, the Court of Appeal considered the following. The catering employees were bound by the collective agreement of Heineken. As a result of the transfer of undertaking, they naturally keep these employment conditions. The collective agreement of Heineken expired on 1 April 2006. Since the collective agreement to which Albron is bound is of a minimal nature, the more favorable provisions of the Heineken collective agreement retain their effect. This may only be otherwise if the parties agree differently, or if a standard collective agreement is declared applicable to Albron. In this case, it is not possible to deviate from the collective agreement.
Before this case came up, it was generally assumed that in order to fall under the Directive on the transfer of undertakings, an employee should formally be employed by the transferor. However, it appears from the Albron case that if employees are seconded on a permanent basis within a group, a material or non-contractual employer may also be regarded as the transferor, besides the formal or contractual employer (in this case the personnel company Heineken Nederlands Beheer B.V.). As a result, the employees who are de facto working for a non-contractual employer may also be transferred, while retaining their rights and obligations.
- It is necessary to take into account the possible existence of a non-contractual employer when transferring an undertaking. This construction is often found in holdings, where employees are in the service of a personnel company, but in fact work at another company. In the event of a transfer of undertaking of their non-contractual employer, these employees are transferred to the transferee, and may lay claim to their former conditions of employment.
- Although the Albron case relates to a situation in which the contractual and the non-contractual employer belong to one group, it cannot be excluded that the judgment will also have big consequences for the payroll sector, for example. In the case of payroll services, the payroll business employs the staff on paper. This makes the payroll business the formal employer, while the staff is in fact working for another company. However, at the moment the consequences for the payroll sector are still not clear.
- When preparing a takeover, it is wise to have a clear picture of whether there are employees who, although not formally employed by the transferor, do work there on a permanent basis through employment with another company.
First published in the Kennedy Van der Laan newsletter - January 2012
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