New judgment regarding transfer of undertakings

Our society is highly affected by the corona crisis, and current labour law discussions are mostly related to temporary lay-offs and other forms of cost reduction. Transactions are and will however continue to be relevant, both during the crisis and not to mention when it (hopefully soon) is over.

In the light of this, it is interesting to note that the European Court of Justice (ECJ) last week issued a remarkable and innovative judgment regarding transfer of undertakings: It was concluded that if the undertaking in which an employee is employed is transferred to more than one new undertaking, the employee may request his or her employment to be (partially) transferred to more than one new employer.

The judgment, which was passed in connection with a case before Belgian courts, must be expected to be of relevance for the state of the law in Norway too. For all of those who deal with transactions involving undertakings with employees (that is, most undertakings), it is important to be aware of this judgment.

In brief, the case concerned a cleaner in ISS who performed work under three different contracts with a public customer in Gent, Belgium. Following a new tender, the work under the three contracts was taken over by two different suppliers of cleaning services (Atalian and Clean Masters). ISS considered that 85 % of the cleaner's employment was transferred to Atalian and 15 % to Clean Master. Atalian opposed the transfer of employment, upon which the employment was terminated. The cleaner then brought legal action against both ISS and Atalian for termination due to a transfer of undertaking (which is illegal).

The ECJ concluded that EU's Directive on transfer of undertakings can be understood such that in a transfer of an undertaking which involves several transferees, the employment shall be transferred to each of these transferees on a pro rata basis.

The Norwegian rules on transfer of undertakings implement the EU directive, and the judgment is therefore decisive for how the Norwegian rules shall be interpreted. An issue like the one concerned by the judgment, has, as far as we know, never before been addressed in case law, neither in the EU nor in Norway. It has been assumed, that in a transfer of parts of an undertaking, one must decide which employees who belong to the transferred part of the undertaking. The question regarding transfer of parts of the employment to various new employers has however never before been addressed. In practice, it has probably not been common to handle transfers this way either.

The question is therefore what consequences the judgment will have for the handling of employments in comparable situations in Norway. It remains to see, but one thing is certain: It is an issue worth paying attention to.