C-319/94

4. According to the national court and the Commission, liquidation of a company under Belgian law must be taken to mean all 2. The action before the national court is the steps which, following dissolution of a between Mr Dassy and Sovam SPRL, his commercial company, are aimed at paying former employer, on the one hand, and Jules creditors out of the corporate assets and dis- Dethier Équipement SA, on the other. tributing any balance to the members. That procedure applies to all commercial compa- nies with legal personality. The reason for the company's dissolution does not matter. During the liquidation, the company acts through the liquidator. He is an organ of the 3. Mr Dassy had been employed by Sovam company and represents it vis-à-vis third SPRL since the beginning of 1974 as head of parties. Under the law, liquidators are its after-sales service department. At the appointed either in the articles of association beginning of the 1990s, the company got into or by general meeting. If the general meeting does not agree on a candidate by the requi- site majority, a liquidator is appointed by the * Original language: German. court. In the latter event, the liquidation is 1 — OJ 1977 L 61, p. 26. one conducted under court supervision, as in

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this case. The only difference from voluntary 8. With the Cour du Travail, Liège, which liquidation is that the procedure for appoint- has made this reference, Jules Dethier ing a liquidator is different. Équipement SA has now lodged appeal. The Belgian court takes the view that, in this case, an undertaking has been transferred for the purposes of the Directive. However, it is not sure whether the Directive can apply because it is open to doubt whether the transfer of a company in liquidation is a con- tractual transfer ('cession conventioneile') 2 of an undertaking for the purposes of 5. O n 5 June 1991, the liquidator appointed Article 1(1) of the Directive. by the court in this case terminated Mr Dassy's contract of employment.

date of a transfer within the meaning of by Collective Agreement N o 32 quater. That Article 1(1) shall, by reason of such transfer, agreement safeguards employees' rights be transferred to the transferee. whenever there is a change of employer resulting from the contractual transfer of an undertaking. It also guarantees certain rights for employees who are taken on in the case of a takeover of assets following insolvency or of a court-approved arrangement with creditors. Collective Agreement N o 32 did not apply to insolvency or similar proceed- ings. The progenitors of Collective Agree- ment N o 32 bis considered, however, that employees of an undertaking adjudged insol- vent or the subject of a court-approved arrangement were in a similar position to 11. In order to prevent circumvention of employees of an undertaking that has been that provision, Article 4 prohibits dismissals transferred and that they, therefore, also effected solely on the grounds of transfer of deserved a minimum degree of protection. an undertaking. Article 4(1) states:

'The transfer of an undertaking, business or part of a business shall not in itself constitute grounds for dismissal by the transferor or the transferee. This provision shall not stand 14. The Collective Agreement also provides in the way of dismissals that may take place that the transferor and transferee are to be for economic, technical or organisational rea- jointly and severally liable for the payment sons entailing changes in the workforce.' of debts existing at the date of the transfer and resulting from contracts of employment existing at that date.

2. Where the contracts of employment of all the employees have been terminated 17. In the first question, the national court by the liquidator and only some of those asks whether the Directive is applicable if the employees have been re-engaged for the transfer is effected by a company in liquida- purposes of the liquidation, may the dis- tion. It is apparent from the wording of the missals of the employees not subse- question and the rest of the preliminary ref- quently taken on by the transferee be erence that the national court considers that regarded as having taken place for econ- a transfer of an undertaking has occurred for omic, technical or organisational reasons the purposes of the Directive. It explains that within the meaning of Article 4(1) of the the liquidator of Sovam SPRL and Jules directive? Must the power to dismiss Dethier Équipement SA entered into an such employees for such reasons be left, agreement for transfer of the business assets. on the contrary, to the transferee alone? That agreement provided, inter alia, that the liquidator was to transfer, for a sum of BFR 2 000 000, the business assets (importation and distribution of domestic electrical appli- ances and equipping and fitting out build- ings), which included:

May staff not taken on by the transferee claim, as against him, merely because an economic entity was transferred shortly after their dismissal for economic, tech- nical or organisational reasons, that the — the goodwill, commercial name and logo;

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— the office furniture, machines, tools and 19. However, since the transferred undertak- vehicles; ing was in liquidation, the national court raises the question whether the transfer in this case was also a contractual transfer.

3 — Case 24/85 Spijkers v Bentdik [1986] ECR 1119, paragraph 4 — Casc 135/83 Abels v Bedrijfsvereniging voor de Metaalindus- 14; Casc C-29/91 Redmond Stichting v Hendrikus Bartol trie en de Elearotedmische Industrie [1985] ECR 469. [1992] ECR I-3189, paragraphs 23, 24 and 25. 5 — Case 135/83 (cited in footnote 3), paragraphs 11, 12 and 13.

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rules were very different in the various principles of the Directive, wholly or in part, Member States led the Court to conclude on the basis of their national law alone. 6 that if the Directive had been intended to apply also to transfers of undertakings occurring in the context of such proceedings, an express provision would have been included for that purpose.

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26. In a further important case, D'Urso, 8 the auditor. The auditor had the power to draw Court had to consider whether the Directive up a programme which had to contain a applied to transfers of undertakings effected restructuring plan. by undertakings under special administra- tion.

29. According to the Court, application of the Directive was dependent on whether or not the undertaking was authorised to con- 27. The Court first applied the criterion of tinue trading. If no decision was taken on the extent of court supervision, which it had authorising the undertaking to continue also mentioned in Abels. In view of the dif- trading or the period of validity of such ferences between the legal systems of the authorisation had expired, 'the aim, conse- Member States, to which reference had quences and risks of a procedure such as the already been made in Abels, the scope of the compulsory administrative liquidation pro- concept of contractual transfer could not be cedure are comparable to those which led determined according to the kind of supervi- this Court to conclude, in its judgment in the sion exercised by the administrative or judi- Abels case, that Article 1(1) of the Directive cial authority over transfers of undertakings did not apply to transfers of an undertaking, in the course of a specific creditors' arrange- business or part of a business in a situation ment procedure. The Court concluded: in which the transferor had been adjudged 'Given all the considerations set out in the insolvent. Like insolvency proceedings, that judgment in the Abels case, the decisive test procedure is designed to liquidate the debt- is therefore the purpose of the procedure in or's assets in order to satisfy the body of question.' 9 creditors, and transfers effected under this legal framework are consequently excluded from the scope of the Directive'. Without that exclusion, the risk of a deterioration in the living and working conditions of work- ers could not be ruled out. 10

and economic objectives thus pursued can- 33. The Commission states that the tasks of not explain nor justify the circumstance that, a liquidator are to realise the assets, settle when all or part of the undertaking is trans- debts and distribute any balance to the mem- ferred, its employees lose the rights which bers. The objective, therefore, is liquidation the Directive confers on them under the con- by means of the realisation of assets. Liqui- ditions which it lays down.' 11 dation occurs for the benefit of the company, whereas in insolvency proceedings the administrator acts exclusively for the benefit of the creditors. The assets must be realised at the best possible price. According to the Commission, the Belgian legislature has here made use of a fiction. Although a commer- cial company's legal personality is necessar- ily brought to an end by dissolution, it is treated as continuing to exist for the pur- 31. Consequently, the essential criterion for poses of liquidation. A company in liquida- the Court is the purpose of the procedure in tion has legal personality solely for the pur- question. The objective of the Directive itself poses of realising the assets, settling debts and the arrangement of the particular pro- and distributing any balance. Pursuing the cedure are further criteria. activity of the dissolved company per se is no longer permitted, save, exceptionally, in so far as it helps to achieve the new object of the company — liquidation — which has replaced the company's previous economic activity. According to the Commission, a company in liquidation can, therefore, only conclude business already started. It may not begin new business, even if it falls within the scope of its previous corporate activity (except if it serves the purposes of the liqui- 32. Those criteria must now be applied to dation). It is often necessary for the com- the liquidation under examination in this pany to continue trading on such a tempo- case. The national court explains that liqui- rary basis in order to prevent the value of the dation of a company must be taken to entail economic entity to be transferred from all the steps which, following dissolution of a depreciating. The entity must continue to commercial company, are aimed at paying trade in order to facilitate the subsequent creditors out of the corporate assets and dis- tributing any balance to the members. transfer. In that case the liquidator can also According to legal writers, liquidation is to enter upon new transactions without special be preferred to commencement of insolvency authorisation. However, he must remain proceedings because it allows the optimal, or aware that continued trading is permitted least disadvantageous, realisation of the only on a temporary basis and with a view to assets, and all or part of the economic activi- subsequent realisation of the company assets ties which are still viable can be safeguarded. under the best possible conditions. Accord- ing to the Commission, the liquidator is per- sonally hable for losses if he continues to trade without restriction. There is no need to 11 — Case C-362/89 (cited in footnote 7), paragraph 32.

38. In the Commission's view, the Directive does not apply, however, if the company in 36. The fact remains, however, that the pur- liquidation resolves to cease business in pose of liquidation is also to realise the order to sell the assets. Discontinuing trade assets, a purpose almost identical to that of definitively in that way stops the Directive insolvency. Nevertheless, it appears to me from applying. The sole purpose of the liq- that winding up the company's affairs is uidation is then to sell the assets and bring more central to liquidation proceedings, the existence of the undertaking to an end. If

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the Directive were to apply in such a case, Directive might have an adverse effect on the the employees would be exposed to an even employees. greater risk. Furthermore, if trading is dis- continued for too long, it can no longer be assumed that the same entity continues to exist and that the business is being contin- ued.

42. In this case, therefore, the Directive should apply, a fortiori, if trading is contin- 40. In D'Urso, the undertaking was in fact ued. It is not a condition, for an undertaking transferred in the end, but, having regard to to be put into liquidation, that liabilities the protective purpose of the Directive, that must exceed assets. Indeed, the conditions transfer could be treated differently from the signalling insolvency must not be satisfied, transfer in this case. In D'Urso, an undertak- since otherwise liquidation would no longer ing which had been, or was being, recon- be permitted. Liquidation may be a stage structed was transferred, and a purchaser is preceding insolvency, but it can also occur — perhaps more easily found for such an as the Belgian Government points out — if undertaking than for one which is in liquida- the members no longer wish to work tion. In that respect, applying the Directive together. In other words, the company does would have no disadvantages for the not necessarily have to be in financial diffi- employees. That is not so — as the Court culties. The Directive should accordingly held in Abels — in the case of insolvency apply in the case of liquidation if the under- proceedings: in this event, applying the taking continues to trade.

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43. It does not matter that liquidation may trade, this happens — as mentioned above — be a stage preliminary to insolvency. In with a view to the undertaking's subsequent Abels, the Court held that the Directive recovery. In this case, therefore, with the applied in the case of judicial leave to sus- undertaking in liquidation continuing to pend payment of debts precisely because it trade, one can likewise neither explain nor was only such a preliminary stage. 12 The justify 'the circumstance that, when all or Court also held in Danmols Inventar that part of the undertaking is transferred, its the Directive also applied to a transfer employees lose the rights which the Direc- 'which is effected in the course of a pro- tive confers on them'. 16 cedure, or at a stage, prior to the commence- ment of [insolvency] proceedings'. 13

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47. O n insolvency, there is a special pro- 51. There are therefore many differences cedure supervised by the court for establish- compared with insolvency proceedings. In ing liabilities. That is not so on liquidation. particular, it is clear that the court has much The liquidator can acknowledge the exist- less influence where liquidation is concerned ence of a liability without having to refer the and that there is no special procedure such as matter to anybody else or have his decision that applicable on insolvency. confirmed by court judgment.

49. A liquidator is an organ of the company, whereas an administrator in insolvency pro- ceedings, who represents the creditors, is a third party -vis-à-vis the company. 53. Whether the Directive or its provisions are in any event applicable to liquidations by virtue of national law, pursuant to Collective Agreement N o 32 bis, must be considered separately. As the Court held in Abels, 17 the Member States are at liberty to apply all or 50. An administrator in insolvency proceed- part of the Directive independently, on the ings disposes of the assets under the supervi- basis of their national law alone. The sion of the insolvency judge, while a com- national court must decide whether this is pany liquidator performs that task under the also the position in the case of liquidation. supervision of the general meeting so that transfer of the undertaking does not need the court's endorsement. 17 — Case 135/83 (cited in footnote 3), parigraph 24.

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'Accordingly, the employees of the under- taking whose contract of employment or employment relationship was terminated with effect from a date prior to that of the transfer, contrary to Article 4(1) of the direc- 55. That uncertainty arises from the wording tive, must be regarded as still in the employ of Article 4(1) of the Directive. It prohibits of the undertaking on the date of the trans- dismissals on the ground of the transfer fer, with the result, in particular, that the alone. That prohibition expressly applies to employer's obligations towards them are both the transferor and the transferee. The automatically transferred from the transferor second sentence, which permits dismissals to the transferee in accordance with Article for economic, technical or organisational rea- 3(1) of the directive. In order to determine sons entailing changes in the workforce, does whether the employees were dismissed solely not indicate whether that right is conferred as a result of the transfer, contrary to Article on the transferor, on the transferee or on 4(1), it is necessary to take into consideration both. the objective circumstances in which the dis- missal took place and, in particular, in a case such as this, the fact that it took effect on a date close to that of the transfer and that the employees in question were taken on again by the transferee.' 20

56. Both the Commission and the Belgian 18 — Case 101/87 Bork International v Foreningen af Arbejdsle- Government consider — in my view rightly dere i Danmark [1988] ECR 3057. — that that possibility must be open to the 19 — Case 287/86 Landsorganisationen i Danmark for Tjenerfor- bundet i Danmark v Ny Mølle Kro [1987] ECR 5465. transferor as well. The Belgian Government 20 — Case 101/87 (cited in footnote 17), paragraphs 17 and 18.

57. The judgment in Bork likewise does not even if the transfer agreement does not pro- indicate whether the transferor may dismiss vide for their re-engagement. employees for economic, technical or organi- sational reasons. In my view, such a right fol- lows, however, from this consideration: according to the judgment in Bork, Article 4(1) prohibits the dismissal of employees where the sole reason is the transfer. It fol- lows from the words 'solely as a result of the transfer' that the transferor can dismiss employees on other grounds. As a minimum, these should be those specified in the second 60. As the Commission rightly points out, sentence of Article 4(1) and be available to this question is wrongly put. If the dismissals the transferor as well. were carried out for economic, technical or organisational reasons, they cannot — as already established above — be unlawful, so that neither the transferor nor the transferee can be accused of acting unlawfully. The fact that an economic entity was transferred shortly after their dismissal does not alter that conclusion. If the dismissal was not car- ried out solely on account of the transfer, it 58. If one considers the liquidation in this is not rendered invalid by the transfer. case, still other — economic — reasons sup- port that interpretation. It gives the liquida- tor the possibility of implementing rationali- sation measures prior to the sale. Potential purchasers will then be more willing to take over the company in liquidation. If the trans- feror is allowed to dismiss employees for economic, technical or organisational rea- sons, the liquidation itself will also be facili- tated, jobs at the undertaking in liquidation 61. This last question could, however, be will be made safe and worker protection will understood and construed differently. It thereby be enhanced. clearly refers to the phrase in the judgment in Bork cited above, as it contains both the criteria mentioned in the judgment: dismiss- als being close in time to the transfer of an economic entity and re-engagement after the transfer of the business. Those criteria were held in Bork to be evidence that the sole rea- son for the dismissals was the transfer and 59. By the second part of the second ques- that they were therefore contrary to Article tion, the national court asks whether staff 4(1) of the Directive. In this case, only one dismissed for economic, technical or organi- of those criteria is satisfied: the dismissal sational reasons may claim, as against the effected by the transferor was close in time transferee, that their dismissal was unlawful to the transfer of the business. There was no for the simple reason that shortly after their re-engagement after the transfer. The ques- dismissal an economic entity was transferred, tion referred by the national court could,

64. I would add only for the sake of com- 62. In order to answer that question, refer- pleteness that, should an employee be dis- ence must again be made to precisely the missed unlawfully by the transferor, that judgment in Bork. There the Court states unlawful action can be pleaded as against the that, in order to determine whether a dis- transferee in so far as the contract of missal is unlawful, it is necessary first to take employment is regarded as continuing to into account the objective circumstances in exist and is thereby transferred to the trans- which it took place. As examples for the case feree as a result of the transfer. Accordingly, which resulted in that reference, it gives the the employee can assert his rights under the two criteria of closeness in time to the trans- contract of employment against the trans- fer of the undertaking and re-engagement feree. after the transfer. Since, in this case, the facts of the action before the national court are different, that court must reach its decision on the basis of other factors. It is true that in this case the dismissal took effect shortly before the undertaking was transferred. However, another important point is that the undertaking was in liquidation at the time of 65. It does not matter whether the individual the dismissal. That circumstance is indicative Member States impose sanctions in this situ- of a dismissal for organisational reasons. The ation. The Belgian Government pointed out Commission also considers that this makes it that in Belgian law there is no provision easier for the employer to prove that the dis- whereby a dismissal is rendered void, so that missal was for economic, technical or organi- the contract of employment cannot be main- sational reasons. tained.

(1) C o u n c i l D i r e c t i v e 7 7 / 1 8 7 / E E C o n t h e a p p r o x i m a t i o n of t h e laws of t h e M e m - ber States relating t o t h e safeguarding of e m p l o y e e s ' rights in t h e event of transfers of u n d e r t a k i n g s , businesses o r p a r t s of businesses applies t o a transfer effected b y a c o m p a n y in v o l u n t a r y liquidation, b u t o n l y o n c o n d i t i o n t h a t the u n d e r t a k i n g c o n t i n u e s t o t r a d e in t h a t context. T h i s applies irrespective of w h e t h e r t h e l i q u i d a t o r is a p p o i n t e d b y the c o u r t o r b y t h e general meeting.

(2) T h e liquidator, t o o , has t h e right t o dismiss e m p l o y e e s for e c o n o m i c , technical o r organisational r e a s o n s .

Staff n o t t a k e n o n b y t h e transferee m a y n o t claim, as against h i m , t h a t their dismissal w a s unlawful m e r e l y because s h o r t l y after their dismissal t h e b u s i - ness w a s transferred as a n e c o n o m i c entity.

W h e n assessing t h e legality of dismissals o n t h e basis of t h e criteria laid d o w n b y t h e C o u r t of Justice, t h e national c o u r t m u s t , however, t a k e i n t o consider- ation all t h e objective circumstances relating t o t h e dismissals, in this case above all t h e fact t h a t t h e c o m p a n y w a s in liquidation.

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