Academic journal article Romanian Journal of European Affairs

The European Law regarding the Impact of Merger on Employees' Rights

Academic journal article Romanian Journal of European Affairs

The European Law regarding the Impact of Merger on Employees' Rights

Article excerpt

Abstract:

The regulation of the social implications of transfers of undertakings is a topic that has made its way in the European law with quite enough difficulty, but became in time an increasingly discussed topic. Since the transfer of an undertaking from an employer to another could not be achieved with disregard of its human capital, the European legislator has established a legal framework ensuring the safeguarding of employees' rights in the event of transfers of undertakings. Currently, the main legal basis in the field consists of Council Directive 2001/23/EC 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 undertakings or businesses - the Transfer Directive. The paper aims to achieve a critical analysis of European regulations on the protection of employees' rights in the event of transfer of undertakings as a result of a merger. The scope of the Transfer Directive, the obligation to inform and consult employees in advance and the transfer of rights and obligations arising from the contract of employment as a result of a merger are being approached. In the study, matters on which the current European legal framework requires improvements so that the achieving of its objective be possible beyond interpretation and controversy are highlighted.

Keywords: European Law, merger, employees, information and consultation, contract of employment, transfer of rights and obligations.

1. Introduction

In order to protect employees' rights which could be impacted in the context of restructuring of their employer, Article 12 of Directive 78/855/EEC of 9 October 1978 concerning mergers of public limited liability companies and Article 11 of Directive 82/891/EEC of 17 December 1982 concerning the division of public limited liability companies provide the informing and consulting procedure of employees' representatives, in the event of domestic mergers and divisions, in accordance with Council Directive 77/187/EEC of 14 February 1977 on the approximation of laws of the Members States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses.

Council Directive 77/187/EEC of 14 February 1977 on the approximation of laws of the Members States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses1, referred by the Merger Directive and the Division Directive, is the first Community legislative act regulating +++the protection of employees in the event of change of employer.

In time, Directive 77/187/EEC, although supplemented by Directive 98/50/EC, proved to be insufficient compared to the subsequent development of the Community legislation, of the legislations of Member States and of the case law of the Court of Justice of the European Communities, therefore a new regulation became necessary.

Thus, in the Community legal framework, Directive 77/187/EEC has been replaced by Council Directive 2001/23/EC 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 undertakings or businesses (the Τransfer Directive)2, which is the current legal base of the protection of employees' rights in the event of a transfer of undertakings, lato sensu3.

2. The scope of the Transfer Directive: a critical look

According to Article 1 of Directive 2001/23/EC, any transfer of an undertaking, business, or part of an undertaking or business to another employer falls under the Community legislative act, irrespective of the public or private nature of the undertakings and whether or not they are operating for profit.

In the European legislation, the transfer of an undertaking means the transfer of a business, from one employer to another, as a result of a conventional assignment or a merger. …

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