TRANSFER OF UNDERTAKING

CELTEC Ltd v Astley and others: Case C-478/03

ECJ: President of Chamber P Jann; Judges K Lenaerts, N Colneric, E Juhász and E Levits; Advocate General M Poiares Maduro: 26 May 2005

The applicants were civil servants employed by the Department of Employment who had been seconded to work for the respondent training and enterprise council in 1990, when such councils were established to undertake work previously carried on by the department, and who, in 1993, had elected to resign from the Civil Service and become employees of the council. In proceedings in the employment tribunal, the applicants sought a determination as to their length of continuous service for the purpose of establishing their entitlements on redundancy, contending that there had been a transfer of an undertaking for the purposes of Council Directive 77/187/EEC with the result that, by virtue of article 3, they were regarded as having continuous service from the date of the commencement of their employment as civil servants notwithstanding the change of employer. The employment tribunal determined that there had been a transfer of training and enterprise activities of the Department of Employment to the council which had been effected by a number of transactions taking place between 1990 and 1993 and that the applicants' continuity of employment had not been broken. The Employment Appeal Tribunal allowed an appeal by the council, concluding inter alia that the transfer of the undertaking to the council had been completed, probably in September 1990, but in any event before 1993 when the applicants resigned from the Civil Service. The Court of Appeal allowed an appeal by the applicants, holding inter alia that the wording of Directive 77/187 was sufficiently wide to embrace the transfer of a business or undertaking which took place over a period of time and that the employment tribunal had accordingly not erred in that respect.

On appeal by the council, the House of Lords referred to the Court of Justice of the European Communities for a preliminary ruling the question, inter alia, whether it followed from the words "the transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer" in article 3(1) of Directive 77/187 that there was a particular point in time at which the transfer of an undertaking, and hence of the transferor's rights and obligations, was deemed to occur, and if so, how that point in time was to be identified.

The Court of Justice held:
"The date of a transfer" in article 3(1) of Directive 77/187 was a particular point in time which could not be postponed to another date at the will of the transferor or transferee and, given that the decisive criterion for establishing whether there was a transfer under article 1(1) was whether a new employer continued or resumed the operation of the unit in question, retaining its identity, was the date on which responsibility as employer for carrying on the business of the unit transferred moved from the transferor to the transferee. For the purposes of applying article 3(1), contracts of employment or employment relationships existing on the date of the transfer, as so defined, between the transferor and the workers assigned to the undertaking transferred were deemed to be handed over, on that date, regardless of what had been agreed between the parties.

Appearances: John Bowers QC, Antony Sendall and Jeremy Lewis (Mace & Jones, Manchester) for the respondent; Gavin Millar QC and Thomas Linden (Russell Jones & Walker) for the applicants; G Rozet and N Yerrell, agents, for the Commission of the European Communities.