C-392/92
ECLI:EU:C:1994:61
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SCHMIDT
OPINION OF MR ADVOCATE GENERAL VAN GERVEN delivered on 23 February 1994 *
Mr President, I would like first to set out the background Members of the Court, to the action in the main proceedings.
2. Mrs Schmidt was employed as a cleaner 1. In the present case, the Landesarbeitsger by the Spar- und Leihkasse der früheren icht Schleswig-Holstein has referred to the Ämter Bordesholm, Kiel und Cronshagen Court for a preliminary ruling the following (Savings and Lending Bank of the former questions on the interpretation of Council Bordesholm, Kiel and Cronshagen Districts) Directive 77/187/EEC on the safeguarding (hereinafter 'the Savings Bank') at a monthly of employees' rights in the event of transfers wage last fixed at DM413.40 net. She was of undertakings ('the directive'): 1 the only cleaner at a savings bank in Wacken, which the defendant had taken over on 1 July 1990.
'1 . May an undertaking's cleaning opera tions, if they are transferred by contract In February 1992 the Savings Bank termin to a different firm, be treated as part of ated its employment relationship with Mrs a business within the meaning of Direc Schmidt on the ground that the branch in tive 77/187/EEC? Wacken had been renovated and extended and the cleaning of the new premises would take far more time than had previously been agreed with her. The Savings Bank subse quently contacted Spiegelblank, the firm which was already responsible for the clean 2. If the answer to Question 1 is in princi ing of the Savings Bank's remaining pre ple in the affirmative, does that also mises, with a view to having it carry out the apply if prior to the transfer the clean cleaning of the branch in Wacken as well. ing operations were undertaken by a single employee?'
* Original language: Dutch. Spiegelblank approached Mrs Schmidt 1 — Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to on 21 February 1992 to work for it for a net the safeguarding of employees' rights in the event of trans monthly wage of DM 520 (which was thus fers of undertakings, businesses or parts of businesses (OJ 1977 L 61, p. 26). higher than her previous wage). Mrs
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Schmidt, however, was not prepared to work Examination of the questions submitted for Spiegelblank for that amount since she had calculated that her hourly wage would be lower in view of the considerable increase in the surface area to be cleaned.
4. In referring its questions, the Landesar beitsgericht seeks to ascertain whether there has in the present case been a 'transfer of an undertaking, business or part of a business' within the meaning of Article 1(1) of the directive, with the result that the provisions of the directive are applicable to this case. Article 1(1) provides as follows:
3. Mrs Schmidt brought an action challeng ing her dismissal under Paragraph 1 of the German Kündigungsschutzgesetz (Law on protection against dismissal) on the ground 'This directive shall apply to the transfer of that it was not socially justified within the an undertaking, business or part of a busi meaning of that provision. In dismissing the ness to another employer as a result of a action, the Arbeitsgericht (Labour Court) legal transfer or merger.' Elmshorn held that the Savings Bank was able to rely on business-related grounds in order to justify the dismissal: the renovation of the branch in Wacken and the resulting extension of the surface area to be cleaned In its order of reference, the Landesarbeits had, it ruled, caused the Savings Bank to take gericht points out that the Court's judgment a commercial decision to have the cleaning in the Redmond Stichting case 2is of rele carried out in future by a cleaning firm vance to the questions in the present case. rather than by its own staff. The Arbeitsger The question here, according to the Lande icht held that it could review such a decision sarbeitsgericht, is whether cleaning activities only on the issue of whether it was mani can also be 'activities of a special nature festly unreasonable or arbitrary. The Savings which constitute independent functions' as Bank's decision was held to be neither. held by the Court in that judgment (see also point 10 below) and, if so, whether the fact that those activities are carried out by a sin gle employee precludes assimilation to part of a business. If the answer to Question 1 is in the affirmative and that to Question 2 is in the negative, Paragraph 613(a)(4) of the Ger man Bürgerliches Gesetzbuch (Civil Code) would, according to the Landesarbeitsger icht, have to be applied by analogy. That
Mrs Schmidt appealed against that decision to the national court which made the refer 2 — Judgment in Case C-29/91 Dr Sophie Redmond Stichting v ence. Bartol and Others [1992] ECRI-3189.
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provision, which is part of the German leg of an autonomous organization (which may islation which transposes the directive into itself be part of a larger organizational national law, provides inter alia that the ter whole). This excludes, for instance, the pos mination of an employment relationship of sibility of describing an isolated element, an employee by the previous employer by such as a machine or a parcel of land, as a reason of the transfer of part of the under transferable part of an undertaking within taking has no effect. The application of that the meaning of the directive; production and provision to the present case by analogy service units in the widest sense, on the other would therefore render the termination hand, should fall within the concept of busi effected by the Savings Bank null and void. ness as so defined. The present case, how ever, is concerned not with a 'business' but merely and exclusively with a decision by an employer to entrust cleaning operations to an outside firm rather than have them carried out any longer by an employee of the under 5. According to the Savings Bank, the Ger taking itself. man Government and the United Kingdom, there is in this case no question of a transfer of the business of an undertaking for the purposes of Article 1(1) of the directive.
6. The United Kingdom, for its part, takes the view that the fact that an undertaking ceases to carry on cleaning activities on its own premises and instead engages a third party to provide those services does not of The Savings Bank argues that the cleaning itself amount to a transfer of an undertaking, operations in question did not form part business or part of a business within the either of its main or of its secondary activi meaning of the directive. Referring to the ties. In its view, the transfer of a particularly criteria elicited by the Court in its relevant small part of its operations cannot constitute case-law, the United Kingdom takes the view a transfer of part of the business within the that there has in the present case been nei meaning of the directive or be assimilated ther a transfer of an undertaking nor a trans thereto by way of analogy. fer of buildings or tangible assets. While there is, it argues, no reason to exclude cleaning operations from the types of activi ties which may be the subject of a transfer within the meaning of the directive, it does not follow that a simple contractual arrange The German Government puts forward a ment with a third party for the provision of more complex argument: it submits that the such services amounts to a transfer of a busi term 'business', as employed in the Court's ness or part of a business. 3 case-law since the judgment in Spijkers, implies that a clearly defined economic objective is being pursued within the context
7. The position taken by the Commission is 3 — Judgment in Case 24/85 Spijkers v Benedik [1986] ECR 1119. particularly at paragrapll 11. more qualified. It takes the view that the
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answer to the question depends on the actual In order for a particular activity to come circumstances under which the cleaning within the scope of the directive, the sole operations in question are carried out. If the factor of crucial importance —· in the light of cleaning is carried out by the staff of the the legal basis of the directive, namely Art undertaking within its own structure and icle 100 of the Treaty — is that it constitutes using the means at its disposal, the cleaning an economic activity within the meaning of operations ought in law to be treated on a Article 2 of the EC Treaty. 5 That is par with the running of a works canteen in undoubtedly the case with regard to cleaning accordance with the description given by the operations.
4 Court in its judgment in Watson Rask. It would in that case be a service which it pro vides itself, in which the unskilled nature of the activity and the absence of any necessary connection with the objects of the undertak That, however, is not the point in the present ing may not result in its being excluded from case. The central question here is whether the scope of the directive. the cessation of a specific operation within an undertaking and the consequent transfer of that operation to an outside undertaking is to be regarded as a transfer of a part of the undertaking within the meaning of the direc If, on the other hand, an outside undertaking tive. is entrusted with the cleaning, that activity cannot, in the opinion of the Commission, be treated as a part of a business within the meaning of the directive. The provision of a 9. As the Landesarbeitsgericht notes, such service would then be involved, to which the an outcome cannot be excluded a priori in undertaking has recourse on a contractual view of the Court's recent case-law, particu basis on the ground that it cannot, or does larly its judgments in Redmond Stichting and not wish to, use its own staff or equipment Watson Rask. to carry out the activity in question.
It is a matter for the national court to determine whether or not the cleaning operations in the present case are covered by the first- In its judgment in Redmond Stichting, the mentioned possibility. Court pointed out that whenever in the case of an undertaking — there, a foundation established under Netherlands law to assist victims of substance abuse — only part of its activities (in particular only the provision of help, but not social or recreational functions) 8. I would like first of all to make it clear are transferred to another undertaking, that that, along with the United Kingdom and the does not necessarily mean that the directive Commission, I see no reason to exclude cleaning operations from the type of activi ties which may form the subject-matter of a transfer within the meaning of the directive. 5 — The Court has already held in its judgment in Case 13/76 Dona v Maniero [1976] ECR 1333, at paragraph 12, and, more recently, in its judgment in Case 196/87 Steymann v Staatssecretaris van justitie [1988] ECR 6159, at para graph 10, that the term 'economic activities', within the meaning of Article 2 of the EC Treaty, covers the pursuit of 4 — Judgment in Case C-209/91 Watson Rask and Christensen v an activity as an employed person and the provision of ser ISS Kantineservice [1992] ECR I-5755. vices for remuneration.
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is inapplicable. The Court pointed out that to the question whether the directive could the mere fact that those social and recre apply to such a situation, adding in particular ational activities that:
'When the owner of an undertalung entrusts, by way of contract, the responsibil ity for the operation of a service in his 'constituted an independent function does undertaking, such as a canteen, to the owner not suffice to rule out the application of the of another undertaking who thereby assumes aforementioned provisions of the directive, the obligations of an employer towards the which were laid down not only for transfers employees affected, the resultant operation of undertakings, but also for transfers may come within the scope of the directive, of businesses or parts of businesses, with as defined in Article 1(1). The fact that in which activities of a special nature may be such a case the activity transferred is for the equated.' 6 transferring undertaking merely an ancillary activity not necessarily connected with its objects cannot have the effect of excluding that operation from the scope of the direc 7 tive.'
10. The judgment of 12 November 1992 in Watson Rask, which was delivered after the 11. The Court has consistently held that the order of reference in the present case determination of whether the directive is in of 27 October 1992, concerned an undertak fact applicable must be left to the national ing, Philips, which had by contract trans court, which can thereby take account of the ferred the running of its four works canteens factors mentioned by the Court in para to a catering firm, ISS. ISS undertook in that graph 13 of its judgment in Spijkers: connection to accept on the same terms Phil ips' employees (numbering approximately 10) who worked in the canteens in return for a set monthly income and advantages in kind. Those advantages consisted in Philips' making available, without charge, the use of 'In order to determine whether those condi premises, tools, electricity, heating, tele tions are met, it is necessary to consider all phone, changing rooms and refuse-removal the facts characterizing the transaction in facilities, as well as the provision by Philips question, including the type of undertaking of certain consumer goods at wholesale or business, whether or not the business's prices. The Court replied in the affirmative tangible assets, such as buildings and mov able property, are transferred, the value of its
6 — Judgment in Redmond Sttcbling, at paragraph 30 (emphasis added). 7 — Judgment in Watson Rask, at paragraph 17 (emphasis added).
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intangible assets at the time of the transfer, of the judgment in Spijkers (which directly whether or not the majority of its employees precede the paragraph cited above): are taken over by the new employer, whether or not its customers are transferred and 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. It should be noted, how ever, that all those circumstances are merely single factors in the overall assessment which '... It is clear from the scheme of Direc must be made and cannot therefore be con tive 77/187 and from the terms of Art sidered in isolation.' 8 icle 1(1) thereof that the directive is intended to ensure the continuity of employment rela tionships existing within a business, irrespec tive of any change of ownership. It follows that the decisive criterion for establishing whether there is a transfer for the purposes of the directive is whether the business in question retains its identity.
12. A case such as this, however, requires additional clarification. The question which arises is whether the mere allocation of an activity to a third party ('contracting out') — even where, as in the present case, neither tangible nor intangible assets of any signifi Consequently, a transfer of an undertaking, cance are directly or indirectly transferred business or part of a business does not occur and only one member of staff is taken over merely because its assets are disposed of. — can be regarded as a transfer of an under Instead it is necessary to consider, in a case taking, business or part of a business within such as the present, whether the business was the meaning of Article 1(1) of the directive. disposed of as a going concern, as would be indicated, inter alia, by the fact that its oper ation was actually continued or resumed by the new employer, with the same or similar activities.'
The starting point for a reply to that ques tion is to be found in paragraphs 11 and 12 13. It is apparent from the above passage that the Court recognizes a common denom inator underlying the three concepts of 8 — Judgment in Spijkers, at paragraph 13; see also paragraph 24 'undertaking', 'business' and 'part of a busi of the judgment in Redmond Stichting and paragraph 20 of the judgment in Watson Rask. ness', namely that of an 'economic unit' or a
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'business', 9 terms which, in my opinion, From all this I infer that the phrase 'under refer to a unit with a minimum level of organ- taking, business or part of a business' within izational independence, which can exist by the meaning of the directive is underpinned itself or constitute part of a larger undertak by the concept of an economic unit which ing. In its judgment in Botzen, which was refers to an organized whole consisting of delivered before that in Spijkers, the Court persons and (tangible and/or intangible) had already held that for the question assets by means of which an economic activ whether there has been a transfer of employ ity is carried on having an objective of its ees' rights and obligations within the mean own, albeit one that is ancillary to the ing of the directive 'the only decisive crite objects of the undertaking; a whole which, rion ... is whether or not a transfer takes moreover, can be part of an even larger cor place of the department to which they were porate whole. 11 assigned and which formed the organiz- ational framework within which their 10 employment relationship took effect.'
15. It is for the national court to apply this 14. In its judgment in Spijkers, the Court definition to a particular case, while bearing stated that a mere transfer of assets is not in mind the 'facts characterizing the transac sufficient to constitute a transfer of an under tion in question' referred to above (point 11). taking, business or part of a business. The With regard to the second question referred German Government is for that reason cor by the Landesarbeitsgericht, I would note rect in pointing out that the mere transfer of, that, although it does not seem desirable to for instance, a parcel of land or a machine me to have a strict quantitative criterion by does not come within the directive. Rather, it which to delimit the scope of the directive, appears from the Court's list that account the fact that the economic activity in ques must be taken (by national courts) of factors tion is performed by a single employee only such as the transfer of 'tangible assets, such is one of the matters which should be taken as buildings and movable property', 'intangi into consideration in determining whether ble assets' and 'whether or not the majority there is an organizational unit. of its employees are taken over'.
11 — Compare this to the definition which the Court, admittedly 9 — 'Economic unit' is the expression used in most of the lan in tlie context of different rules, has developed for the con guage versions of the judgment, particularly in the Danish cept of 'part of a business' within the meaning of Article 7 ('ekonomisk enhed'), German ('wirtschaftliche Einheit'), of Directive 69/335/EEC concerning indirect taxes on the French ('entité économique'), Italian ('entita economica'), raising of capital (OJ, English Special Edition 1969 (II), Portuguese ('entidade económica') and Spanish ('entidad p. 412) as referring to 'any part of an undertaking if it con económica'). 'Business' is the term used in the English ver stitutes an organized whole of assets and persons capable of sion, 'bedrijf' that used in the Dutch. acting together to perform a particular activity' (judgment 10 — Judgment in Case 186/83 Botzen and Others v Rotterdam- in Case C-50/91 Commerz-Credit-Bank AG-Europartner v selle Droogdok Maatschappij [1985] ECR 519, at para Finanzamt Saarbrucken [1992] ECR I-5225, at paragraph graph 14 (emphasis added). 12).
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Conclusion
16. I accordingly propose that the Court reply to the questions referred by the Landesarbeitsgericht as follows:
Cleaning operations constitute an economic activity which may come within the scope of Directive 77/187/EEC. In determining whether that directive does in fact apply to a situation in which an undertaking ceases cleaning operations previously performed by its staff in order to contract them out to a separate undertaking, the national court must consider, in the light of the criteria for interpretation provided by the Court in its well-established case-law, whether a particular case involves the transfer of an economic unit, that is to say an organized whole consisting of persons and (tangible and/or intangible) assets by means of which an economic activity is carried on having a specific, even ancillary, objective of its own.
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