Partial transfer of undertaking: The European or the French method? Case C-344/18, 26 March 2020 ISS Facility v. Cour de cassation 30 Sept. 2020, case 18-24.983

Author: Jean-Philippe Lhernould (Professor at Université de Poitiers)

A few months ago, the CJEU held that

“where there is a transfer of undertaking involving a number of transferees, the rights and obligations arising from a contract of employment are transferred to each of the transferees, in proportion to the tasks performed by the worker concerned, provided that the division of the contract of employment as a result of the transfer is possible and neither causes a worsening of working conditions nor adversely affects the safeguarding of the rights of workers guaranteed by that directive, which it is for the referring court to determine”.

It added that

“if such a division were to be impossible to carry out or would adversely affect the rights of that worker, the transferee(s) would be regarded as being responsible for any consequent termination of the employment relationship, under Article 4 of that directive, even if that termination were to be initiated by the worker” (Case C-344/18, 26 March 2020, ISS Facility Services NV / Sonia Govaerts, Atalian NV) (EELA Updates | EELC Subscribers).

In a similar case where a French company had sold part of its business activities to another French company located in another city, the Cour de cassation had to decide whether the employment contract of an employee who was working half-time for the economic entity transferred would be transferred or not (link to the case). Inspired by the ECJ ruling, the French high Court applied the following distinction: If the division of the contract of employment as a result of the transfer is possible and neither causes a worsening of working conditions nor adversely affects the safeguarding of the rights of workers guaranteed by that directive, the contract is transferred in proportion to the tasks performed by the worker concerned; if the division does not meet the aforementioned conditions, the contract is not transferred at all.

While the first part of the assertion is identical of that to the CJEU, the second part differs.  Whereas the CJEU pointed out the responsibility of the transferee for any consequent termination of the employment relationship, the French court chose to preserve the (integral) contractual link between the employee and the transferor. In other words, according to the French ruling, when the transfer of undertaking is partial, the existence of an economic entity does not necessarily entail the transfer of an employment contract.

It is true that Article 4(1) of Directive 2001/23/EC does not preclude the possibility of dismissals occurring for economic, technical or organisational reasons entailing changes in the workforce. It also is true that such a transfer of the rights and obligations in proportion to the tasks performed by the worker makes it possible, as the CJEU states, to ensure a fair balance between protection of interests of workers and protection of the interests of transferees. However, the purpose of that directive is first of all to ensure, as far as possible, that the contract of employment or employment relationship continues unchanged. The French ruling seems thus more in line with this general purpose even if, in practice, there is no guarantee that the employee will not be dismissed by the transferor since part of the activity he was attached has been sold.