C-127/96

A — The provisions of German law I - 8183

B — The provisions of Spanish law I - 8184

IV—-The facts and the questions referred by the national court 1-8185

A — Joined Cases C-127/96, C-229/96 and C-74/97 I - 8185

(1) Case C-127/96, Hernández Vidal I- 8185

(2) Case C-229/96, Friedrich Santner I-8186

B — The case-law of the Court I - 8193

C — Joined Cases C-127/96, C-229/96 and C-74/97 I- 8201

(1) Case C-127/96, Hernández Vidal I - 8201

(2) Case C-229/96, Friedrich Santner 1-8205

(3) Case C-74/97, Gómez Montaña I - 8207

D — Joined Cases C-173/96 and C-247/96 I - 8208

I — Introduction 4. The other two joined cases are also con­ cerned with the problem of undertakings suc­ ceeding one another in the performance of an activity. In Case C-247/96 Horst Ziemann, however, it will be necessary to consider the concept of a transferable economic entity.

1. In the present cases, the Court has been asked to interpret certain provisions of Council Directive 77/187/EEC of 14 Feb­ ruary 1977 on the approximation of the laws of the Member States relating to the safe­ guarding of employees' rights in the event of transfers of undertakings, businesses or parts II — The relevant Community provisions 1 of businesses (hereinafter 'the Directive').

2. The questions raised in these cases have for the most part already been settled, mainly in the recent judgment delivered by the Court 2 in Süzen. 5. It is clear from the second recital in the 3 preamble to the Directive that the purpose of the Directive is 'to provide for the protec­ tion of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded'.

3. With regard to the first three joined cases, however, it must be pointed out that the Court had never had occasion to rule on a case in which one undertaking, having entrusted the cleaning of its premises to another, decides to terminate the contract and take over the cleaning operation itself (resump­ tion in-house).

10. The Directive was transposed into German law by § 613a of the Bürgerliches Gesetzbuch (German Civil Code, hereinafter 'BGB'), which provides as follows: 8. Under Article 4(1), 'the transfer of an undertaking, business or part of a business shall not in itself constitute grounds for dis­ missal by the transferor or the transferee. This provision shall not stand in the way of dis­ missals that may take place for economic, technical or organisational reasons entailing changes in the workforce'. 'Rights and obligations in the event of trans­ fers of businesses

B — The provisions of Spanish law

'2. The former employer shall be jointly and severally liable with the new owner in respect of the obligations referred to in paragraph 1, in so far as such obligations arose before the date of the transfer and fall to be met within a year of that date. However, where such 12. The Directive was transposed into Spanish obligations fall to be met after the date of the law by Article 44 of the Estatuto de los Tra­ transfer, the former employer shall be liable 6 bajadores (Labour Relations Regulations), only in respect of the period before the date which provides that: of the transfer.

3. ... '1 . The transfer of an undertaking, business or independent production unit of a business shall not in itself terminate the employment relationship, as the new employer takes over the former employer's rights and obligations 4. Termination of an employee's employment with respect to employment. ... relationship by the former employer or the

16. The two women brought an action for 13. Prudencia Gómez Pérez and María unlawful dismissal against the two companies Gómez Pérez were employed for many years before the Juzgado de lo Social No 5 (Social by Contratas y Limpiezas, SL (hereinafter Court No 5), Murcia. By judgment of 23 'Contratas y Limpiezas'), a company engaged March 1995, that court upheld the claim in the business of cleaning buildings and pre­ against Hernández Vidal only and ordered it mises. Both are cleaners. to re-employ the two women or to pay them damages and to pay their wages for the period from the date of dismissal to the date of ser­ vice of the judgment.

I-8185

OPINION OF MR COSMAS —JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96

17. Taking the view that no transfer of a the cleaning using its own workers or using business or part of a business had taken place workers under a new contractual arrange­ and that it could not therefore be held to be ment?' a transferee, Hernández Vidal appealed against that judgment to the Tribunal Superior de Justicia (High Court of Justice), Murcia.

(2) Case C-229/96, Friedrich Santner

18. Considering that the outcome of the case 19. From 1980 Friedrich Santner was depended on the interpretation of the Direc­ employed as a cleaner, first by tive, the Sala de lo Social (Chamber for Social Dörhöffer+Schmitt GmbH (hereinafter Matters) of the Tribunal Superior de Justicia, 'Dörhöff er+Schmitť) and then by B+S GmbH Murcia, referred the following questions to (hereinafter 'B+S'), which was created after the Court for a preliminary ruling: the business of Dörhöffer+Schmitt was split up.

20. Mr Santner was engaged solely in cleaning '1 . Is the work of cleaning the premises of an the bathhouses of Hoechst AG (hereinafter undertaking whose main business is not 'Hoechst') under cleaning contracts which cleaning, being in this case the production Hoechst had concluded with each of the two of chewing gum and sweets, but which aforementioned companies in turn. has a permanent need for that secondary activity "part of a business"?

2. Is the position the same where, following their retransfer to the undertaking, those 27. At the end of the contractual period, cleaning operations of individual parts of Renfe decided not to renew the contract with the business are re-merged into the cleaning Claro Sol and to take over the cleaning and operations of the business as a whole?' maintenance of Pontevedra railway station itself.

(3) Case C-74/97, Gómez Montaña

28. On 1 October 1996, Claro Sol informed Mrs Gómez Montaña that the employment 24. The Red Nacional de los Ferrocarriles relationship between them would terminate Españoles (Spanish National Railways, here­ on 15 October 1996, when the contract inafter 'Renfe') had awarded a contract to the between Renfe and Claro Sol expired.

I-8187

OPINION OF MR COSMAS — JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96

29. Mrs Gómez Montaña brought an action nation of a contract with a cleaning company for unlawful dismissal against Claro Sol and results in the dismissal of the worker employed Renfe before the Juzgado de lo Social No by the contractor and the cleaning is taken 1 (Social Court No 1), Pontevedra. over by the principal, a railway transport undertaking, using its own employees?'

'Does Directive 77/187/EEC of 14 February 1977 cover circumstances in which the termi­ 32. The Municipality of Guadalajara had con­ tracted out its home-help service for persons in need to the Sociedad Cooperativa Minerva 10 — Article 6(1) of the Texto Final del XIV Convenio Colectivo de 'Contratas Ferroviarias 1994' (Final Text of the Four­ (Minerva Cooperative Society, hereinafter teenth Collective Agreement on Railway Contracts 1994 'Minerva') which, for this purpose, had been (BOE of 25 January 1995, No 21, point 217)) provides that a new undertaking which replaces the previous contractor employing Francisca Sánchez Hidalgo and must take on the staff employed at the workplace affected by the transfer and assume the rights and obligations arising four other employees as home helps for sev­ from the existing employment relationship. Under Article eral years. 23(1) of the Convenio Colectivo de Limpieza de Edificios y Locales de Pontevedra (Collective Agreement on the Cleaning of buildings and premises in Pontevedra, Informacion Laboral 1996, No 4090, p . 8586), on expiry of the cleaning contract, the workers of the outgoing undertaking must be taken on by the new contractor, who must assume all the rights and obligations of the previous employer if any of the condi­ tions specified in that provision is fulfilled. Article 23(3) provides that this does not apply in the case of a contractor who is carrying out the cleaning for the first time and has not concluded a maintenance contract.

34. Aser then concluded a new contract with the Tribunal Supremo (Supreme Court), the Mrs Sánchez Hidalgo and the other four protection conferred on employees by Article employees for the same services on a part- 44 of the Estatuto de los Trabajadores is time basis but did not recognise their period applicable only where one of the following of service with the previous undertaking. circumstances obtains: (a) there is a transfer of material assets from one contracting under­ 1 taking to another; 3(b) that effect is provided for by the rules applicable to the sector (at present, only the collective agreement); (c) there is a specific provision to that effect in the conditions governing tenders for the new 35. Taking the view that the refusal to take contract. However, the national court con­ into account their previous service constituted siders that none of those circumstances obtain an infringement of Article 44 of the Estatuto in the present case. de los Trabajadores, the five employees brought proceedings before the Juzgado de lo Social (Social Court), Guadalajara, for a dec­ laration that their employment relationship with Minerva had been taken over by Aser.

40. The national court's doubts stem from its (2) Case C-247/96, Horst Ziemann impression that the Court considers that the Directive is applicable when there is merely a succession in the exercise of an activity, regard­ less of whether there has been a transfer of 14 assets.

42. Horst Ziemann had been continuously employed from 1979 to 1995 as a security guard at a medical supplies depot of the Bundeswehr (Federal Armed Forces) at Efringen-Kirchen. During that period he was employed by each in turn of the five security companies successively responsible for main­ 41. Considering that the outcome of the case taining site security at the depot. Most recently, depended on the interpretation of the Direc­ from 1990 to 1995, responsibility for this tive, the Social Chamber of the Tribunal Supe­ activity had passed to Ziemann Sicherheit rior de Justicia de Castilla-La Mancha referred GmbH (hereinafter 'Ziemann Sicherheit'). the following question to the Court for a pre­ liminary ruling:

46. On 9 October 1995, Mr Ziemann brought an action before the Arbeitsgericht (Labour Court) Lörrach to have his dismissal declared unlawful. Specifically, he claimed that the ter­ 49. In its order for reference, the national mination of the contract for protecting the court points out that the activity carried on Bundeswehr medical supplies depot at by the various succeeding companies in rela­ Efringen-Kirchen and the award of that con­ tion to protecting the medical supplies depot tract to Horst Bohn amounted to a transfer at Efringen-Kirchen was exactly the same. of part of a business within the meaning of § 613a BGB, paragraph 1, and Directive 77/187/EEC and that Ziemann Sicherheit had dismissed him for reasons related to that transfer, in breach of § 613a BGB, paragraph 4.

50. To be precise, the national court states that the contract between the Bundeswehr, which runs the medical supplies depot, and the security outfit is a detailed contract drawn up by the competent military administration 47. The two undertakings, Ziemann Sicher­ and put out to tender. Both the invitation to heit and Horst Bohn, argued that no transfer tender and the contract itself specify in great of a business could have occurred in this case detail the nature and scope of the security because there was no legal relationship duties entailed; the required number of secu­ between them. rity guards and accompanying dogs; require­ 16 ments concerning security personnel vis- à-vis qualifications, equipment, training, supervision and weapons instruction.

48. According to the Arbeitsgericht, it appears from the case-law of the Court, in particular 15 the judgment in Schmidt, that the Directive is applicable whenever an undertaking con­ 51. The national court adds that the contract tinues or, as in this case, takes on an activity is performed in accordance with the require- carried on until that time by another under­

2. Is that at any rate the case if, on termina­ tion of the contract, the part of the busi­ ness reverts to the body awarding the con­ tract, which then immediately enters into a contract for services with a successor 53. The national court is consequently which contains essentially the same stan­ inclined to the view that it is in fact dealing dard conditions? with part of the Bundeswehr's business, namely 'site security maintenance'. It also considers that, since the Bundeswehr prede­ termines the form of the contract and since the site and equipment are the same and the same security personnel have been deployed for years, the 'economic entity' in question retains its identity, even if on each occasion a 3. Is there at any rate a transfer of a business different employer actually runs it. within the meaning of Article 1(1) of Direc­ tive 77/187/EEC if essentially the same employees continue to perform the same 17 — Gesetz über die Anwendung unmittelbaren Zwanges und surveillance duties on essentially the same die Ausübung besonderer Befugnisse durch Soldaten der terms, which are determined to a large Bundeswehr und zivile Wachpersonen, Bundesgesetzblatt (Official Gazette), I, p. 796. extent by the body awarding the contract?'

I - 8192

HERNÁNDEZ VIDAL AND OTHERS

V — The questions referred by the national Article 177 of the Treaty, and would diminish court the role of the national court in the adminis­ tration of ordinary law within the Commu­ nity legal order. In accordance with Article 177, 'it is clear therefore that the Court has never attempted wholly to displace national courts, and traditionally leaves certain matters A — The need to answer the questions 19 to be decided by the referring court'.

I - 8193

OPINION OF MR COSMAS — JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96

Treaty. There can be no doubt that cleaning, existence of a transfer within the meaning of the maintenance and protection of various the Directive is whether the entity in ques­ premises, and provision of home-help services tion retains its identity, as indicated inter alia for persons in need are examples of such eco­ by the fact that its operation is actually con­ nomic activities. tinued or resumed'.

61. The Court has also ruled on a number of 24 occasions that 'the Directive is applicable wherever, in the context of contractual rela­ tions, there is a change in the natural or legal 23 59. The Court has also repeatedly ruled person who is responsible for carrying on the that 'the decisive criterion for establishing the business and who incurs the obligations of an employer towards employees of the under­ taking. Thus, there is no need, in order for the Directive to be applicable, for there to be 20 — The concept of an 'economic activity' within the meaning of Article 2 of the Treaty covers the pursuit of an activity as an any direct contractual relationship between employed person or the provision of services for remunera­ the transferor and the transferee: the transfer tion; see, for example, Case 196/87 Steymann [1988] ECR 6159, paragraph 10, and Case 13/76 Dona [1976] ECR 507, may also take place in two stages, through the paragraph 12. intermediary of a third party, such as the 21 — Of an undertaking's photocopiers, lifts and electrical appli­ ances, for example. owner or the person putting up the capital' 22 — See Case 101/87 Bork [1988] ECR 3057, paragraph 13. See (my emphasis). also Joined Cases 144/87 and 145/87 Berg v Besselsen [1988] ECR 2559, paragraph 12, and Case C-305/94 Rotsart de Hertaing [1996] ECR I-5927, paragraph 16. 23 — See Süzen, cited in footnote 2, paragraph 10; Case 24/85 Spijkers [1986] ECR 1119, paragraphs 11 and 12; and, most recently, Joined Cases C-171/94 and C-172/94 Merckx and 24 — See, for example, Süzen, paragraph 12, and Merckx and Neuhuys [1996] ECR I-1253, paragraph 16. leuhuys, paragraph 28.

64. It should be noted that, in his Opinion in 27 Schmidt, Advocate General Van Gerven pointed out that 'the Court recognises a 67. As regards the first criterion formulated common denominator underlying the three by the Court, namely the extent to which concepts of "undertaking", "business" and there is a part of a business or a business, I "part of a business", namely [the concept] of believe it is important to take account of the an "economic unit" ..., [a term] which, in my specific nature of the economic activity in opinion, refer[s] to a unit with a minimum each particular case, such as, for example, the level of organisational independence, which

28 — See, for example, Case C-48/94 Rygąard [1995] ECR I-2745, paragraphs 20 and 21, and Sitzen, cited in footnote 2 above, 25 — See, for example, Merckx and Netthuys and Süzen, cited paragraph 13. above in footnotes 23 and 2 respectively. 29 — It is interesting to note that Article 1(1)(b) of Directive 26 — For example, in Case 287/86 Ny Mølle Kro [1987] ECR 98/50 provides that there is a transfer within the meaning of 5465, paragraph 14 and, particularly, paragraph 15, the Court that Directive 'where there is a transfer of an economic held tnat the Directive is applicable where the owner of a entity which retains its identity, meaning an organised leased undertaking resumes its operation following a breach grouping of resources which has the objective of pursuing of the lease by the lessee. an economic activity, whether or not that activity is central 27 — Point 13. or ancillary'.

I-8195

69. Consequently, neither the fact that an undertaking providing cleaning services has no actual assets — whether tangible (build­ ings, tools and equipment, etc.) or intangible 71. Indeed, this follows indirectly from the (know-how, goodwill, etc.) — nor the fact 33 judgment in Süzen, according to which: '... that, if awarded a contract, it is provided with Where in particular an economic entity is only minimal resources by the client under­ 30 able, in certain sectors, to function without taking, means that the service provided any significant tangible or intangible assets, cannot be an organised and independent eco­ the maintenance of its identity following the nomic entity. Otherwise, whole categories of transaction affecting it cannot, logically, undertakings with the above characteristics depend on the transfer of such assets'. would probably receive no protection under the Directive and their employees — those

31 — Sitzen, paragraph 21. 32 — In this connection, see Vivien Shrubsall, 'Competitive ten­ 30 — For example, use of the client's electricity, heating and dering, Out-sourcing and the Acquired Rights Directive', refrigerators on the premises where the cleaning or mainte­ Modern Law Review, 1998, pp. 85 to 92, p. 88. nance, etc. is carried out. 33 — Paragraph 18.

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HERNÁNDEZ VIDAL AND OTHERS

. . the retention between the activities carried on before and of that identity [that of an economic entity] is indicated inter after the transfer and the period, if any, for alia by the actual continuation or resumption by the new employer of the same or similar activities' (my emphasis). It which those activities were suspended. It concluded that, in the case at issue, where ail the relevant information was contained in the order for reference, 'the should be noted, however, that all those cir similarity in the cleaning work performed before and after cumstances are merely single factors in the the transfer, which is reflected, moreover, in the offer to re-engage the employee in question, is typical of an opera overall assessment which must be made and tion which comes within the scope of the Directive and 34 which gives the employee whose activity has been trans cannot therefore be considered in isolation.' ferred the protection afforded to him by that Directive'. However, in my view, the Court's use of the term 'inter alia' (my emphasis). means that the pursuit of an economic activity is not the only criterion for determining whether a transfer of an undertaking, business or part of a business has occurred and that other facts must also be taken into account.

See also Dr. takings, the mere fact that the service pro Manfred Zuleeg, 'Ist der Standard des deutschen Arbeitsre vided by the old and the new awardees of a chts durch europäische Rechtsprechung bedroht? Bemerkungen zum Urteil Christel Schmidt des Europäis contract is similar does not of itself justify the chen Gerichtshofs', in 'Das Arbeitsrecht der Gegenwart', pp. 41-54, and Dr. Bernd Waas, 'Betriebsübergang durch 'Funk- conclusion that an economic entity has been tionsnachfolge'?', in EuZW 17/94, pp. 528/532. transferred. In this connection, the Court It is interesting to note that, shortly after the judgment in 35 Schmidt and as a result of the critical response it provoked, ruled in Süzen that: 'An entity cannot be the Commission incorporated in its Proposal for a Direc tive (94/C 274/08) COM(94)300 final — 94/0203(CNS) (OJ reduced to the activity entrusted to it. Its 1994 C 274, p . 10) amending Directive 77/187 a provision identity also emerges from other factors, such (Article 1(1), second subparagraph) which read: 'The transfer of an activity which is accompanied by the transfer of an as its workforce, its management staff, the economic entity which retains its identity shall be deemed to be a transfer within the meaning of this Directive.

I-8197

OPINION OF MR COSMAS — JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96

employees are transferred. In addition, its absence of such assets does not necessarily main assets are the order book, the list of preclude the existence of such a transfer ...'. customers, the way in which the work is organised, etc. In this case, there is no doubt as to the interpretation and application of the provisions of the Directive. On the other hand, the question does arise in the case of the transfer — or, to be more specific, the loss — to a competitor of a service contract for cleaning one or more establishments, 77. The Court went on to say, in the same 39 entailing the loss of a single customer (for judgment, that 'the national court, in example, a contract for cleaning a single office). assessing the facts characterising the transac­ tion in question, must take into account among other things the type of undertaking or busi­ ness concerned. It follows that the degree of importance to be attached to each criterion for determining whether or not there has been a transfer within the meaning of the Direc­ tive will necessarily vary according to the 37 activity carried on, or indeed the production 75. The Court held in Sitzen that: 'The or operating methods employed in the rel­ mere loss of a service contract to a competitor evant undertaking, business or part of a busi­ cannot... by itself indicate the existence of a ness. Where in particular an economic entity transfer within the meaning of the Directive. is able, in certain sectors, to function without In those circumstances, the service under­ any significant tangible or intangible assets, taking previously entrusted with the contract the maintenance of its identity following the does not, on losing a customer, thereby cease transaction affecting it cannot, logically, fully to exist, and a business or part of a busi­ depend on the transfer of such assets'. ness belonging to it cannot be considered to have been transferred to the new awardee of the contract'.

79. It is true that the Court pointed out in contract, it would mean that the protection this connection, in its judgment in Sitzen, afforded by the Directive depends essentially that 'the factual circumstances to be taken on the intentions of the parties. It could be into account in determining whether the con­ argued that this cannot be a decisive criterion ditions for a transfer are met include in par­ in determining the protection to be afforded ticular, in addition to the degree of similarity by the Directive because, as some Member of the activity carried on before and after the States have rightly pointed out in their written transfer and the type of undertaking or busi­ observations, it begs the question: the result ness concerned, the question whether or not achieved by applying the Directive becomes the majority of the employees were taken over a condition determining whether it is to 41 42 by the new employer'. It added: 'Since in apply. This absurd conclusion, or vicious certain labour-intensive sectors a group of circle, is clearly contrary to the intention of workers engaged in a joint activity on a per­ the Community legislature, which was to manent basis may constitute an economic protect employees in the event of a change in entity, it must be recognised that such an the ownership of the undertaking, business or entity is capable of maintaining its identity part of a business as a result of a legal transfer after it has been transferred where the new or merger. The negative repercussions for employer does not merely pursue the activity employees of admitting readiness to take over in question but also takes over a major part, staff as a decisive criterion for the application 43 in terms of their numbers and skills, of the of the Directive cannot be neglected. employees specially assigned by his prede­ cessor to that task. In those circumstances, as stated in paragraph 21 of Rygaard, cited above, the new employer takes over a body of assets enabling him to carry on the activities or cer­ tain activities of the transferor undertaking on a regular basis'.

82. In Rotsart de Hertaing, which—admit­ tangible or intangible assets are of little or no tedly —concerned the interpretation of Article importance. 3(1) of the Directive, the Court was able to avoid the issue, ruling in the light of earlier 45 case-law that 'in the event of the transfer of an undertaking, the contract of employment or employment relationship between the staff concerned and the undertaking transferred may not be maintained with the transferor and is automatically continued with the trans­ 46 feree'. It concluded that 'contracts of employment or employment relationships 84. For these reasons, I consider that in the existing on the date of the transfer of an case of undertakings, businesses or parts of undertaking between the transferor and the businesses in which the human factor, the workers employed in the undertaking trans­ workforce, is the main consideration, the pres­ ferred are automatically transferred to the 47 ence of a group of workers engaged in a joint transferee by the mere fact of the transfer'. 48 activity on a permanent basis — a group that In the same judgment, the Court added that is taken over by the transferee or contractor '... by reason of the mandatory nature of the — is of decisive importance. In other words, protection afforded by the Directive, and in the question whether there has been a transfer order not to deprive workers of that protec­ of an undertaking, business or part of a busi­ tion in practice, the transfer of the contracts ness should be considered in the light of that of employment may not be made subject to factor; and that should be the criterion for the intention of the transferor or the trans­ determining the application of the Directive, feree, and more particularly ... the transferee rather than the — to my mind — unimpor­ may not obstruct the transfer by refusing to tant issue of whether or not a certain number, fulfil his obligations'. or even the majority, of the staff have been re-engaged by the new employer.

86. I do not dispute that the factor of inten­ which one undertaking, having entrusted the tion, in the sense of the wishes or actions of cleaning of its premises to another, decides to the parties (the transferor or the body terminate the contract and take over the awarding the contract and the transferee or cleaning work again itself (resumption 50 the new contractor), also constitutes a crite­ in-house). rion for determining whether or not a transfer has occurred. That factor cannot be disre­ garded. The readiness to take over all or most of the employees, in terms of their numbers and skills, is undoubtedly an important factor and one that should prompt the court adju­ (1) Case C-127/96, Hernandez Vidal dicating on the merits to consider carefully whether there are any other factors indicative of a transfer of an economic entity. In other words, I have been pursuing this line because of the particular nature of the undertaking or business at issue in the present case. I repeat (a) Question 1 that the Court has taken this factor into account, notably in its judgment in Spijkers.

89. As regards the point raised in the first question — to what extent application of the 87. This approach also has the advantage of Directive is affected by whether the activity reconciling the principle of economic freedom, at issue is the main business of the under­ 5I the freedom to enter into contracts with all taking or a secondary activity — the the attendant risks that freedom entails, on case-law is quite clear. the one hand, with the principle of subroga­ tion in the event of transfers and protection of employees, on the other.

of only part of its activities (namely, the in such a case the activity transferred is merely provision of assistance to drug addicts but an ancillary activity for the transferor without not the organisation of social and recreational a necessary connection with its company objects activities) did not necessarily preclude the cannot have the effect of excluding that trans­ 57 application of the Directive. The Court action from the scope of the Directive'. 53 observed that the mere fact that the organi­ sation of social and recreational activities is 'said to have constituted an independent func- tion is not sufficient to rule out the applica­ tion of the aforementioned provisions of the Directive, which were laid down not only for transfers of undertakings, but also for trans­ 92. Consequently, bearing in mind the points fers of businesses or parts of businesses, with made in section (B) above, I take the view which activities of a spedai nature may be that the work of cleaning the premises of 54 equated'. undertakings — an activity for which they have a permanent need even where their main business is not cleaning — may fall within the scope of the Directive if it is carried out by a stable group of employees pursuing a specific objective; this holds true even where there has been no transfer of significant tangible or intangible assets, provided that there is an economic entity and that that entity retains its identity after the transfer.

55 91. In Watson Rask, the Court made the 56 following observation: 'Thus, where one businessman entrusts, by means of an agree­ ment, responsibility for running a facility of his undertaking, such as a canteen, to another businessman who thereby assumes the obli­ (b) Question 2 gations of employer vis-à-vis the employees assigned to that facility, the resulting transac­ tion may fall within the scope of the Direc­ tive, as defined in Article 1(1). The fact that

94. As I explained earlier, provided that there is an economic entity and that entity retains 5S 97. In Watson Rask, the Court held that: its identity after the transfer, the mode of 'First, the decisive criterion for establishing transfer is immaterial. The fact that the transfer whether there is a transfer for the purposes of takes the form of a contract under which cer­ the Directive is whether the entity in ques­ tain activities are entrusted by one under­ tion retains its identity, as indicated inter alia taking to another and that those activities are by the fact that its operation is actually con­ subsequently resumed by the first under­ 59 60 tinued or resumed'. It added that it is taking after the termination of the contract is necessary to consider all the facts charac­ not, in my view, decisive for the application terising the transaction in question, including of the Directive, provided the other condi­ whether or not the majority of employees are tions described above are met. taken over by the new employer.

95. It is true that, when the whole cleaning business is transferred, the transfer includes an organised group of employees and the 98. In the present case, it is apparent from main assets, comprising the order book, the the contract concluded between Hernandez list of customers, the way in which the work Vidal and Contratas y Limpiezas that, is organised, etc. In such cases, there is clearly although the employees worked in the pre­ no particular problem concerning the applica­ mises of the former undertaking, their employ­ tion of the protective provisions of the Direc­ ment relationship was with the latter. More­ tive. over, no offer was made to re-engage Prudencia and Maria Gómez Pérez after the contract between Hernández Vidal and Contratas y Limpiezas expired.

103. In view of the specific nature of cleaning activities, the answer to the question whether or not there has been a transfer depends not so much on the transfer of certain material assets (electrical and other equipment used for the work), as on whether or not a majority 101. As regards the second branch of Ques­ of the employees are taken over by the new tion 2, it is, I think, sufficient to point out employer, whether or not the customers are that the Court has consistently ruled that the transferred and the degree of similarity Directive is applicable wherever there is a between the activities carried on before and change in the person responsible for carrying after the transfer. In any event, it is for the on the business and there is no need for there national court to establish in each case, in the to be any direct contractual relationship light of the criteria for interpretation set out 61 between the transferor and the transferee. above, whether or not there has been a transfer.

61 — See,for example, Merckx and Neubuys, Daddy's Dance Hall, 62 — See, in particular, Spijkers and Redmond Stichting, cited in Bork and Redmond Stichting, cited in footnotes 23, 14, 22 footnotes 23 and 14 above, paragraphs 13 and 24 respec­ and 14 above, paragraphs 30, 10, 14 and 13 respectively. tively.

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108. I should also point out that, in the 105. The first question referred by the national present case, the existence of part of a busi­ court seeks to ascertain whether, in a case ness within the meaning of the Directive is where, following termination of the legal not precluded by the fact that Hoechst has transfer to an outside firm of the cleaning carried out part of the cleaning operations operations of individual parts of a business, itself, using its own workers, following ter­ those operations are again carried out by the mination of the legal transfer of the opera- undertaking itself, they can be treated as part of a business within the meaning of the Direc­ tive. 64 — Sec, for example, Rygaard and Sitzen, cited in footnotes 28 and 2 above, paragraphs 20 and 13 respectively. 65 — I note that, in Schmidt, cited in footnote 14 above, the fact that the cleaning activity was performed by a single employee did not prevent the Court from deciding (paragraph 15) that 63 — Sec, for example, Daddy's Dance Hnil, cited in footnote 14 there was a stable economic entity. It added that the protec­ above, paragraph 14, and Case C-319/94 Jules Dethier tion afforded by the Directive cannot depend on the number Equipement [1998] ECR I-1061, paragraph 40. of employees assigned to the part of the business transferred.

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OPINION OF MR COSMAS — JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96

110. The second question seeks to ascertain whether the position is the same where, fol­ lowing their transfer back to the undertaking, those cleaning operations of certain parts of 114. I would point out, however, that Article the business premises are re-merged with the 4(1) of the Directive states that the transfer of cleaning operations of the premises as a whole.

67 — Unlike the situation in Schmidt. 68 — According to the documents before the Court, the employees 66 — See Case 186/83 Botzen [1985] ECR 519, paragraph 15, and in question were disabled people specially trained for the Schmidt, cited in note 14 above, paragraph 13. purpose.

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an undertaking, business or part of a business decisive in determining the answer to be given shall not in itself constitute grounds for dis­ to the national court. missal by the transferor or the transferee but that this provision shall not stand in the way of dismissals that may take place for eco­ nomic, technical or organisational reasons entailing changes in the workforce. Moreover, 69 the Court has held that both the transferor and the transferee have the power to effect such dismissals.

69 — Sec Jules Dethier Equipement, cited in footnote 63 above, paragraph 37. 70 — See also Süzen, cited in footnote 2 above, paragraph 16.

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119. The national court will, however, have does not — according to the case-law of the to determine whether, in order to provide the Court — preclude the possibility that there services in question, that is to say in order to may be a transfer of a business or part of a carry out the work, Claro Sol needed a cer­ business within the meaning of the Directive. tain number of employees (workers or mana­ Nor should particular importance be attached gerial staff) and certain assets, minimal though to the number of employees assigned to the they might be (tools, equipment). part of the business in question, if other fac­ tors suggest that there has been a transfer.

120. Similarly, the national court will have to consider whether there was a transfer of an organised grouping of employees, or at least 123. Lastly, it should be borne in mind that a major part of such a grouping, in terms of Article 7 of the Directive states that Member their numbers and skills, or whether there States may apply or introduce laws, regula­ was a transfer of operating methods or the tions or administrative provisions which are way in which the work is organised, before more favourable to employees. deciding in the light of all these indications whether or not there was a transfer.

D —Joined Cases C-173/96 and C-247/96

128. In other words, it is for the national court to establish whether there is a transfer of part of a business, by determining whether the home-help service has been continued with the same team of home helps, possibly assisted by other employees, whether the same timetable has been kept, whether the service is provided for the same people, etc. 126. Thus, in so far as this is a labour- intensive sector, the criterion of a group of workers, in the sense of a group of employees engaged in a joint activity on a permanent 71 basis, is of decisive importance. It is for the national court to determine whether there is 129. The fact that the Municipality of Guad­ such an organised grouping. The fact that alajara, after putting the contract out to tender such employees, as a group, arc engaged by again, awarded it to a different undertaking is the new owner may indicate that there is a not, in my view, a decisive factor that should transfer within the meaning of the Directive, affect the answer to be given by the Court even if no significant tangible or intangible and thus preclude the application of the Direc­ assets have been transferred. tive; it is undoubtedly sufficient that too much time should not have elapsed between the two transfers.

130. In other words, there must be a close temporal connection between the expiry of a 127. The national court must also establish, contract and its award to another operator. for example, the degree of similarity between The length of the interval must be considered the activities carried on before and after the by the national court in the light of the facts 72 transfer and the structure of the undertak­ and the nature of the business in question but it is enough in any event if the useful effect

of the protective provisions of the Directive by the body awarding the contract (the is preserved, Bundeswehr), on the one hand — in the invi­ tation to tender — as regards organisation of the task of protecting the medical supplies depot at Efringen-Kirchen by the particular body to which the contract is awarded, and, 131. Similarly, too much importance — to on the other hand, as regards the performance the point of affecting the Court's answer — of that task. ought not to be attached to the fact that there is no provision, either in the collective agree­ ment or in the tendering conditions, to the effect that the new undertaking to which the service was entrusted after the contract had 133. The national court essentially raises two been put out to tender must be subrogated to problems in the questions it refers to the the previous contractor vis-à-vis its employ­ Court. First, it calls for a definition of the ment relationship with the workers. Indeed, concept of an economic entity in the context 'by reason of the mandatory nature of the of the transfer of a business following a change protection afforded by the Directive, and in in the provider of the service; this point is order not to deprive workers of that protec­ raised essentially in the first part of the first 75 tion in practice,' the application of the question and in the third question. It then Directive cannot be made to depend on raises the problem of the importance to be whether or not a collective agreement or ten­ attached to the fact that the change in the dering conditions contain a provision to that provider of the service came about as a result effect, since its application depends on a of a call for tenders and the fact that there 76 number of circumstances, in fact and in law, was no direct contractual relationship between which will determine whether or not there the undertakings successively responsible for has been a transfer. security (protection and monitoring) at one of the Bundeswehr's medical supplies depots; this problem is raised in the second part of the first question and in the second question.

135. In other words, given that the body awarding the contract (the Bundeswehr) 139. Both Ziemann Sicherheit and the German defines in detail the rules for the organisation Government consider that protection of the and exercise of certain activities which con­ medical supplies depot did not constitute an tinue to be performed by essentially the same economic entity, since Ziemann Sicherheit was employees, the question before the Court is unable to operate independently because of whether this indicates the existence of an eco­ the Bundeswehr's influence over the organi­ nomic entity, the transfer of which would fall sation and performance of the tasks in ques­ within the scope of the Directive. If not, that tion. In their opinion, what was transferred is to say, if there is no economic entity, the was a contract, not a business or part of a question of whether the protective provisions business. of the Directive apply does not arise.

140. According to the Commission, there is an economic entity but it was not transferred; 136. For the Directive to be applicable in a rather, it belonged, and still belongs, to the case where two undertakings are responsible Bundeswehr, which permits it only a in turn for the exercise of an activity, the first mininimal measure of organisational structure undertaking must have established a suffi­ and independence. ciently organised (economic) entity for the purpose.

141. As I have already mentioned, the Court 77 has held that 'for the Directive to be appli­ cable, ... the transfer must relate to a stable 137. It must therefore be determined whether economic entity whose activity is not limited the influence exerted by the body awarding to performing one specific works contract'. It the contract on the organisation and exercise has also stated that: 'The term entity thus of that activity by the awardee may, in some refers to an organised grouping of persons cases, effectively deprive the latter of its freedom of action and consequently of the power to establish an organised economic 77 — See, for example, Rygaard and Süzen, cited in footnotes 28 entity to exercise the activity in question. and 2 above, paragraphs 20 and 13 respectively.

145. It is true that an economic entity must be organised, that is to say, it must have an 143. Consequently, as the Commission rightly organisational structure, however minimal, in observes (at point 22 of its written observa­ order to constitute an undertaking, business tions), the question of a transfer of a business or part of a business. or part of a business from the first contractor to the second (that is, from Ziemann Sicher­ heit to Horst Bohn) arises only if the 'site security maintenance' of the medical supplies depot at Efringen-Kirchen is an economic entity and therefore part of a business within the meaning of Article 1(1) of the Directive and if that part of a business belonged to 146. In practice, that could refer mainly to Ziemann Sicherheit before it was transferred the way in which staff are organised, the to Horst Bohn. If, on the other hand, the 'site length and continuity of the period during security maintenance' part of the business which the activity is exercised, the existence always belonged to the Bundeswehr despite of a work schedule with set hours of work, the fact that its management was entrusted to the selection of staff and their assignment to a succession of outside firms, the question of specific tasks. These factors, mentioned purely whether there has been a transfer of part of a by way of example, must be checked in each business does not arise. case by the national court.

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78 — I should point out that the contract between the Bundeswehr, which runs the medical supplies depot, and each of the secu­ rity outfits is a highly detailed contract drawn up by the competent military administration and that it is put out to tender. Both the call for tenders and the contract list in detail the nature and scope of the security guards' duties; the 148. The Commission considers that, in this number of security guards and accompanying dogs; the requirements to be satisfied by the security guards deployed; case, in view of the facts as described by the requirements vis-à-vis the qualifications required of security guards, their equipment, training, supervision and weapons national court, there was no transfer of part instruction. The authority awarding the contract (the of a business by the Bundeswehr to the first Bundeswehr) places at the disposal of security personnel, on the premises of the medical supplies depot, a duty room; undertaking and, after termination of the con­ lavatories and washing facilities; rest area and changing rooms. The contractor may deploy only security guards tract, to the second. Effectively, in terms of its approved by the awarding authority in writing; it must give organisational structure and autonomy, the it prior notice of replacement staff; and it must relieve per­ sonnel of their duties and replace them, if the awarding economic entity constituted by the 'mainte­ authority so requires, at any urne. The national court adds that the site security contract is performed in accordance nance of site security' at the medical supplies with the conditions imposed by the Bundeswehr and on a depot at Efringen-Kirchen inheres perma­ special legal basis, namely the UZwGBw.

151. The national court observes that the contractor is required not to deploy those 153. In my view, it follows that the first body security guards on other sites; however, the to which the contract is awarded has a cer­ same situation could arise, for example, in tain, albeit small, degree of freedom in the connection with the guarding of a bank. The way in which it organises the economic entity contractor must provide certain equipment 'maintenance of site security' and performs (uniform, armbands, a weapon, truncheon, the tasks assigned to it. Similarly, the contrac­ whistle, torch, first-aid pack, security equip­ tor's duties are not limited solely to sup­ ment etc.). Clearly, all these factors must be plying, for consideration, security personnel taken into account in determining whether with whom it has concluded a contract of there are grounds for speaking of an economic employment and the Commission's arguments entity which the contractor is, at least to some to the contrary must be rejected as being extent, responsible for organising. without foundation.

(i) The second limb of the first question 156. However, to ascertain whether there was a transfer from the first contractor to the second after termination of the contract, it is necessary to refer to the various criteria derived from the case-law of the Court, which the national court must take into account, bearing 159. In the second limb of the first question, in mind the specific nature of the activity at the national court seeks to ascertain whether issue. According to the documents in the case, the Directive is applicable where the transfer it is an activity in which the human factor is takes the form not of a direct transfer between paramount and the tangible or intangible two undertakings but of the termination of a assets are clearly of lesser importance. contract with one undertaking and its award to another following an invitation to tender.

to a different undertaking — matters little, tive to apply, it is significant that in the present provided that the conditions, specified by the case, on termination of the contract with the Court and set out in its judgment in Süzen, first undertaking, the part of the business for determining whether or not there has been represented by the maintenance of site secu­ a transfer are satisfied. The rules applicable in rity at the medical supplies depot reverted to 84 the event of the termination of a (site security the body awarding the contract, and was maintenance) contract followed by the award thereupon immediately contracted out to 85 of a new contract without any prior invita­ another undertaking under a contract for tion to tender will therefore apply in the the supply of services stipulating essentially present case mutatis mutandis. Moreover, the the same standard conditions. The national Court has consistently ruled that there is no court inquires, therefore, whether the fact that need for any direct contractual relationship a new contract was concluded immediately between the new contractor and its predeces­ with another contractor, on effectively the 81 sor for there to be a 'legal transfer' within same terms, decisively supports a finding that 82 the meaning of the Directive. the 'site security maintenance' part of the business was transferred and thus a transfer of part of a business was effected by means of a prior call for tenders.

(ii) Question 2: the importance of the interval between the two contracts

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question were not allowed to apply in a case 164. That said, it should be noted that, in the where a long-standing 'site security mainte­ light of the information provided in the order nance' contract, performed within an under­ for reference, this question does not appear to taking by a security unit, is terminated without arise in the present case, because the close being immediately transferred to another secu­ temporal connection between termination of rity outfit. As the Commission rightly the Bundeswehr's contract with the first 87 observes (in point 47 of its written observa­ undertaking (Ziemann Sicherheit) and its 86 tions), it is for the national court, when award of the new contract to the second considering whether the part of the business undertaking (Horst Bohn) may be regarded 88 in question remained the same after the transfer as established, since the transition from one 89 as before, to determine whether there is indeed to the other occurred directly, without any such a close temporal connection. lapse of time.

VI — Conclusion

165. I therefore propose that the Court give the following answers to the questions referred by the national courts :

A — Joined Cases C-127 / 96 , C-229/96 and C-74 / 97

(2) Question 2 in Case C-127/96, Hernandez Vidal; Question 2 in Case C-229/96, Friedrich Santner; and the question in Case C-74/97, Gómez Montaña

'Article 1(1) of Directive 77/187 is to be interpreted as meaning that the Directive is not applicable in a situation in which one undertaking, having entrusted the cleaning of its premises to another, terminates the contract and takes over the cleaning operation itself, using its own employees or staff engaged for that purpose, unless there is a concomitant transfer from one undertaking to the other of signifi­ cant tangible or intangible assets, or unless — in sectors such as cleaning services, in which the workforce is the main production factor — the first-mentioned under­ taking takes over a major part, in terms of their numbers and skills, of the employees assigned by its predecessor to the performance of the contract.'

B — Joined Cases C-173/96 and C-247/96

(1) The question in Case C-173/96, Sánchez Hidalgo

'Article 1 of Council Directive 77/187/EEC of 14 February 1977 on the approxima­ tion 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 is to be interpreted as meaning that the service of home help for persons in need may fall within the scope of the Directive, even where no significant tangible or intan­ gible assets are involved, if it is carried out by a stable group of employees pursuing a specific objective, that is to say by an economic entity, and that entity retains its identity after the transfer.

(a) The first part of Question 1

'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 is to be inter­ preted as meaning that a transfer of an undertaking, business or part of a business cannot be ruled out merely on the ground that, on the basis of the applicable legal or contractual provisions, the body awarding the contract exerts a direct influence over the awardee with respect to the manner in which the contract is performed. A case of this kind may fall within the scope of the Directive if there is a stable group of employees pursuing a specific objective, that is to say, an economic entity, and that entity retains its identity after the transfer.'

(b) Question 3

'Article 1(1) of Directive 77/187 is to be interpreted as meaning that the Directive is applicable where the body awarding the contract terminates its contract with the

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OPINION OF MR COSMAS —JOINED CASES C-127/96, C-229/96 AND C-74/97 AND JOINED CASES C-173/96 AND C-247/96