C-132/91

Mr President, (2) The former employer shall be jointly Members of the Court, and several liable together with the new owner for the obligations referred to in 1. In the instant cases, the Court has had subparagraph 1 in so far as they arose referred to it a number of questions by two before the date of the transfer and have German courts, the Arbeitsgericht Bamberg to be fulfilled no later than one year (Case C-132/91) and the Arbeitsgericht after that date. However, where those Hamburg (Cases C-138/91 and C-139/91). obligations have to be performed after The questions are concerned with the com­ the date of the transfer, the former patibility with Articles 3 and 7 of Council employer shall be liable only to the Directive 77/187/EEC (hereinafter referred extent corresponding to the part of the to as 'the directive') ' of case-law of the period which had elapsed at the time of Bundesarbeitsgericht, according to which an the transfer to which those obligations employee has a right to object to the transfer relate.' of his employment relationship in the event of a transfer or a merger of undertakings. 3. By a law of 13 August 1980, 3Paragraph Facts and relevant legislation 613a of the BGB was amended as part of the process of implementing the directive. How­ ever, the excerpt from subparagraphs 1 and 2. Subparagraphs 1 and 2 of Paragraph 613a 2 of that paragraph which is reproduced of the Bürgerliches Gesetzbuch [German above was not amended. In 1974, shortly Civil Code — BGB], which were inserted after the introduction of Paragraph 613a of into the BGB by the Betriebsverfassungs­ the BGB, the Bundesarbeitsgericht, which is gesetz of 15 January 1972 [Law on the orga­ 2 the highest German court with jurisdiction nization of businesses] before the directive over labour cases, evolved case-law accord­ was adopted provide as follows: ing to which, where part of an undertaking is '(1) Where an undertaking or a part of an transferred by means of a legal transaction to undertaking is transferred by means of a another owner, employees are not bound to legal transaction to another owner, the accept the automatic transfer of their con­ latter shall take over the rights and obli­ tracts of employment to the transferee. gations arising under the employment Employees have a right of objection in so far relationships existing at the time of the as they may declare that the legal effects of transfer ... . the transfer are not to apply as far as they are concerned. 4 In subsequent judgments, the Bundesarbeitsgericht has confirmed that case-law and defined the rules governing the * Original language: Dutch. 1 — Council Directive 77/187/EEC of 14February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of trans­ fers of undertakings, businesses or parts of businesses (OJ 3 — Bundesgesetzblatt I, p. 1308. 1977 L 61, p. 26). 4 — Judgment of the Bundesarbeitsgericht of 2 October 197·!, 2 — Bundesgesetzblatt I, p. 13. BAG AP, Paragrapli 613a of the BGB, paragraph 1.

5. In those circumstances, the Arbeitsgericht Bamberg requested the Court to give a pre­ liminary ruling on the following questions: 4. The facts of Case C-132/91 are as follows. Mr Katsikas, the plaintiff in the main pro­ ceedings, was employed as a cook by the Greek restaurant 'Fischtaverne' at Lichten- fels, which was owned by Mr Konstantini- '1 . Is it possible under Article 3(1) of the dis, the defendant in the main proceedings. Council Directive of 14 February 1977 on By a contract concluded between Mr Kon- the approximation of the laws of the Mem­ stantinidis and a Mr Mitossis, the operation ber States relating to the safeguarding of of the business was transferred to Mr Mito­ employees' rights in the event of transfers of ssis with effect from 2 April 1990. In that undertakings, businesses or parts of busi­ contract, Mr Mitossis undertook to discharge nesses (Directive 77/187/EEC) for an Mr Konstantinidis with effect from that date employee of the transferor at the date of from all obligations arising in connection transfer within the meaning of Article 1(1) of with the operation of the restaurant, in par­ Directive 77/187/EEC to object to the trans­ ticular, from obligations relating to the pay­ fer of rights and obligations from the trans­ ment of wages and salaries. Mr Katsikas feror to the transferee, with the result that objected to being transferred to a new the transferor's rights and obligations are not employer and asked Mr Konstantinidis to transferred to the transferee? take him on at another of his restaurants. On 26 June 1990, Mr Konstantinidis dismissed him on behalf, he claims, of Mr Mitossis. 2. If Question I is answered in the negative:

3. If Question 2 is answered in the affirma­ They therefore brought an action to protect tive: themselves against dismissal. They main­ tained that their employment relationship with Paetz remained unchanged; they had not been transferred to Tiedemahn under Is Article 7 of Directive 77/187/EEC to be Paragraph 613a of the BGB or brought to an interpreted as meaning that it must refer to end by termination on 8 October 1990. They express provisions of laws, regulations or claimed that their objection prevented the administrative measures (which are more transfer of their employment relationships to favourable to employees)? the new owner of the relevant part of the business as a result of the case-law of the Bundesarbeitsgericht. They claimed that their dismissal as notified by the aforemen­ tioned letter was baseless and socially unjus­ 4. If Question 3 is answered in the negative: tified, and that they should continue to be employed by Paetz.

I-6591

OPINION OF MR VAN GERVEN — JOINED CASES C-132/9I, C-138/91 AND C-139/91

Elucidation of the questions Member States may provide that, after the date of transfer within the meaning of Arti­ cle 1(1) and in addition to the transferee, the transferor shall continue to be liable in 8. The three cases raise the same key ques­ respect of obligations which arose from a tion, namely whether the grant to an contract of employment or an employment employee of a right of objection, the exercise relationship.' of which has the effect of preventing the employee's employment relationship with the transferor from being transferred to the transferee, is compatible with the directive. However, the two German courts have taken Comparison of Article 3(1) of the directive somewhat different approaches to the issue. and subparagraphs 1 and 2 of Paragraph 613a The Arbeitsgericht Bamberg takes Article of the BGB shows that the first subpara­ 3(1) of the directive as its starting point, and graph of Article 3(1) corresponds more or asks whether the right of objection is com­ less to the part of Paragraph 613a(1) set out patible with that provision. In the event that above and that Paragraph 613a(2) contains it is not compatible therewith, it goes on to more precise rules within the meaning of the ask whether such a right of objection may be second subparagraph of Article 3(1) of the provided for in accordance with Article 7 of directive. the directive by a law, regulation or adminis­ trative provision expressly or impliedly, namely by means of a judicial interpretation. In contrast, in Cases C-138/91 and C-139/91, the Arbeitsgericht Hamburg As for Article 7 of the directive, it states as makes its question turn directly on Article follows: 7 of the directive.

I would add forthwith, however, that as far as the principle of the right of objection is concerned it does not make much difference 'ensure, as far as possible, that the rights of whether that right, as created by the case-law employees are safeguarded in the event of a of the Bundesarbeitsgericht, is assessed change of employer by allowing them to directly in the light of Article 3(1) of the remain in employment with the new directive or in the light of Article 7. As in the employer on the terms and conditions agreed 7 case of Article 7, it also turns in the case of with the transferor'. Article 3(1) (see section 16, above) essentially on whether or not such a right of objection is more favourable to employees. Consequently, the directive manifestly has a social aim: in the event of a transfer of an undertaking, it aims to safeguard, in the employee's interest, existing employment relationships and social rights acquired in the 8 context of such relationships. It is from that 11. I shall, deal with the national courts' aim that the provisions of Article 3(1) and questions as follows. I shall first consider Article 4(1) — which provides that the trans­ whether under Article 3(1) of the directive as fer shall not in itself constitute grounds for such an employee is entitled to object to the dismissal by the transferor or the transferee transfer of his employment relationship to — flow. 9 the transferee or whether that provision pre­ cludes a priori such a right of objection. In that connection, I shall give my views on whether the right of objection is, or is not, 13. The only restriction on the protection more favourable to employees than the sys­ afforded by the directive which the Court tem laid down by the directive and, if I find that it is, on what conditions. Lastly, I shall be considering whether the case-law of the 7 — Judgments in Case 287/86 Ny Molle Kro [1987] HCR 5465, Bundesarbeitsgericht can be described as a paragraph 12, in Case 324/86 Foreningen af Arbejdsledere i Danmark v Daddy's Dame Hall [1988] ECR739, paragraph more favourable provision within the mean­ 9, in Joined Cases 144/87 and 145/87 Berg v Beuchen [1988] ECR2559, paragraph 12, in Case 101/87 Bork [1988] ECR ing of Article 7 of the directive. Before 3057, paragrapli 13, and in Case 326/89 D'Uno [1991] ECR answering those questions, it seems worth I-4105, paragraph 9. 8 — Judgments in Berg v Bestehen, paragraph 13, and in D'Urso, calling to mind again the aim and system of paragraph 9. the directive and the relevant case-law of the 9 — For an outline of the system of the directive, sec, inter alia, the judgments in Case 19/83 Wendelboe [1985] ECR 457, Court of Justice. paragraph 15, and in Ny Malte Kro, paragraph 11.

15. In common with the Commission, I consider that no right of objection, the exer­ It may appear from that judgment that the cise of which would result in the employ­ directive seeks to protect employees pro­ ment relationship being maintained with the vided that at the date of the transfer they are transferor, arises for the employee under still employed in the business or the part of Article 3(1) of the directive. This clearly fol­ the business transferred by the transferor, lows from the judgment in Berg v Besselsen. which is not the case where they have termi­ In that case, the Hoge Raad der Nederlanden nated their employment relationship of their (Supreme Court of the Netherlands) asked own accord at the date of the transfer. the Court whether it followed from Article 3(1) of the directive that, after the date of the transfer, the transferor is released from his obligations under the contract of employ­ 11 14. Although, according to the preamble, ment or the employment relationship (solely the directive seeks to reduce the differences by reason of the transfer), even where the remaining in the Member States as regards employees of the undertaking do not consent the extent of the protection of employees, it to that effect or oppose it. The Court's answer was clear:

10 — Judgments in Case 105/84 Foreningen af Arbejdsledere i Danmark v Danmols Inventar [1985] ECR 2639, paragraph 16, and in D'Urso, paragraph 11. 12 — Judgments in Danmols Inventar, paragraph 26, and Dad- 11 — Third recital in the preamble to the directive. dy's Dance Hall, paragraph 16.

'It follows that the employees concerned are not entitled to waive the rights conferred on 'Its purpose is not, however, to ensure that them by the directive and that those rights the contract of employment or the employ­ cannot be restricted even with their consent. ment relationship with the transferor is con­ This interpretation is not affected by the tinued where the undertaking's employees fact that, as in this case, the employee do not wish to remain in the transferee's obtains new benefits in compensation for the 1 employ.' 4

disadvantages resulting from an amendment Both the Arbeitsgericht Hamburg in its to his contract of employment so that, taking order for reference and the Commission in the matter as a whole, he is not placed in a its written observations to the Court are 17 worse position than before.' somewhat hesitant about the answer to be given to this question. The Arbeitsgericht observes that from the point of view of the possibilities open to the individual employee — that is to say, from the point of view of his freedom — the right of objection is unquestionably a provision that is more The Court added that the position would be favourable to employees, but that, having different only in so far as national law regard to the potentially greater risk of dis­ allowed the employment relationship to be missal by his present employer after the altered in a manner unfavourable to employ­ transfer, the employee's situation is not nec­ ees in situations other than the transfer of an essarily more favourable from the point of undertaking. If, under national law, the view of social protection. For its part, the transferor of the undertaking is entitled to Commission considers that, in order for the alter (with the employee's agreement) the right of objection to be regarded as being rights and duties arising under the employ­ more favourable in every case, it would be ment relationship, the transferee may do the necessary to subject its exercise to certain 19 same within the same limits, although the conditions. However, it concedes that such transfer of the undertaking itself may never a solution would not be easy to put into 18 actual practice, and goes on to conclude that constitute the reason for that amendment. However, these cases do indeed relate to the right of objection, as laid down and jus­ transfers of undertakings and hence the rule tified in the Bundesarbeitsgericht's case-law, that parties to a contract of employment may nevertheless constitutes a more favourable not derogate from the provisions of the provision within the meaning of Article 7 of directive in a manner which is unfavourable the directive. to the employee and therefore may not restrict his rights applies unabated.

employee. He may have good reasons for I shall be returning later to the second part opting for this solution, for example if he has of that alternative. The first part, namely the no confidence in the transferee's business conclusion of an agreement, may, in my strategy, solvency or personnel policy 20 opinion, be clarified as follows. It is obvi­ (including his policy on maintaining and ous that, where an employee wishes to exer­ paying pensions) or, in the case of a legal cise his right of objection, he will discuss it person, in the management of the corporate with his employer, the transferor. Such a dis­ transferee. cussion is in the interests of both parties, cer­ tainly where a number of employees, or even whole groups, wish to exercise their right of objection. In such case, both the employees and transferor need to have an accurate pic­ ture of the stability of the employment situ­ ation in the transferor's undertaking and to Of course, if the transferor closes down the know whether, how and where the employ­ activities of his business completely and has ees may be assigned after the transfer of the no other business capable of taking the business. However, in order for such a dis­ employee on, maintaining his employment cussion to afford a guarantee for the employ­ relationship with his former employer entails ees, the outcome must be set out in a binding an increased risk of the employee's being agreement. The fact that an employee may dismissed by that employer on economic validly conclude such an agreement is grounds ('betriebsbedingte Kündigung'). implicit in the case-law of the Court, accord­ However, even in that case, the transfer of ing to which the employee may, without the undertaking cannot itself, under Article infringing Article 3(1) of the directive, termi­ 4(1) of the directive, constitute grounds for nate his employment relationship with effect dismissal. In any event, I consider that the from the date on which the undertaking is employee himself is best placed to assess that transferred (see section 13, above). If an risk in liaison with the transferor. employee is entitled to bring his employ­ ment relationship completely to an end, he may, a fortiori, agree with his present employer to maintain his employment rela­ tionship with him after the transfer.

employees which would diminish their ing jurisdiction over employment disputes, rights. It is only where the right of objection the provision in question (here Paragraph is hedged about in this way with guaranties 613a of the BGB) is itself a legal provision set out in an agreement binding on the within the meaning of Article 7 of the direc­ present employer that it will, in my view, tive and the consistent case-law is part and comply with the rule that the parties to a parcel of that provision. Since that case-law contract of employment are not entitled to already existed when Paragraph 613a of the derogate from the mandatory rules of the BGB was adapted to suit the directive (see directive in a manner which is unfavourable section 3, above), it can be regarded as hav­ 21 to the employees. ing been impliedly approved by the national legislator when the directive was transposed into national law, and can therefore be con­ sidered to be a provision which the Member Is the right of objection a provision which is State can continue to apply within the mean­ more favourable to employees within the ing of Article 7. meaning of Article 7 of the directive?

I - 6598

KATSIKAS v KONSTANTINIDIS, SKREB AND SCHROLL v STAUEREIBETRIEB PAETZ

following the transfer. Since, therefore, the ment relationship no longer forms part of employee must express his objection before the business or part of a business which has the transfer, there is no infringement of the been transferred. In my view, the limited principle contained in the directive of the exception in cases where the employee is not 24 automatic transfer of his rights and obliga­ informed or informed belatedly does not tions to the transferee: the exercise of the alter matters: it is perfectly proper that such right of objection results in the employment negligence on the part of the employer relationship between the employee and the should not place the employee at a disadvan­ 25 transferor being maintained and the employ­ tage.

Conclusion

22. I propose that the Court should answer the questions referred by the Arbeits­ gericht Bamberg and the Arbeitsgericht Hamburg as follows:

Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses does not pre­ vent a Member State from conferring on employees the right to declare that the legal effects of a transfer of an undertaking are not to apply with regard to them, as a result of which their contracts of employment with the transferor will be main­ tained, provided that it is guaranteed — by means of an agreement between the employees and the employer or under a law, regulation or administrative provision within the meaning of Article 7 of the directive — that that right of objection is more favourable to employees, not only in principle but also in practice.