of Contract, and Industrial Democracy*
P. L. DAVIES
The transfer of an employing enterprise from the control of one legal person to another raises two basic issues for labour law. First, what is the impact of such a transfer upon the rights, individual and collective, of the workers as against their employer? Possible answers range from simply substituting the new controller for the old one so that, at least formally, the employees' rights are untouched, to regarding the transfer of control as releasing the new controller from the obligations attaching to the old controller, so that the workforce and the new controller begin again from scratch with no guarantee that the new structure of rights will resemble the old one. The second issue is what role the employees (or their representatives) are to play in the decision-making process which leads to the transfer of control. Again the possible range of answers is wide: the matter may be regarded as one entirely for the new and old controllers, the employees playing no role, or, at the other end of the spectrum, one could envisage a set of rules which gave the employees a veto over the transfer.
The theory of acquired rights purports to answer the questions in a way that is protective of the interests of the employees and the purpose of this paper is to explore the ramifications of the theory. The first distinction to make is between the narrow and the broad forms of the acquired rights theory, which correspond to the two rather different issues postulated above as arising for labour law out of transfers of control. The narrow form of the acquired rights theory says that whatever rights (individual and collective) the employees enjoyed against the old controller should obtain also against the new controller. This argument, be it noted, tells us nothing about what the breadth of the employees' entitlements against the old controller should have been. Rather it simply asserts that, whatever the substantive scope of those rights was, the employees' protection should be no less (but, semble, no greater) vis-à-vis the new controller. As we shall see, the agnostic nature of this argument in respect of the substance of the employees' rights has been an important limiting factor upon the European Court of Justice's approach to Directive 77/187.1____________________