Recent CJEU Case Law on the Transfer of Asset-Reliant Undertakings

Abstract

It is established law that, for the purposes of the EU Acquired Rights (Business Transfers) Directive 2001/23 (ARD), the transfer of an activity alone is not sufficient to amount to a transfer of an undertaking. An undertaking means an economic entity which retains its identity. In Ferreira da Silva e Brito & others v Estado Português1 and Administrador de Infraestructuras Ferroviarias (ADIF) v Luis Aira Pascual , 2 the Court of Justice of the European Union (CJEU or European Court) considered the transfer of undertakings rules in two cases where the functions being carried out by the transferor employer relied heavily on the use of assets for their operation. In Spijkers v Gebroeders Benedik Abattoir CV , 3 the European Court considered that in order to determine whether there has been a transfer of an economic entity, it is necessary to consider, as a whole, the facts characterising the transaction involved, depending on the type of undertaking or business concerned. 4 The transfer of a business as, in the Court’s words, a ‘going concern’, would be indicated inter alia by the fact that its operation was continued or resumed by the new employer carrying on the same or similar activities. This necessarily involves consideration of whether tangible assets, intangible assets, the majority of employees and the circle of customers are transferred. Regard has also be had to the period (if any) during which the activities of the enterprise were suspended. 5 The importance to be attached to each criterion will necessarily vary depending on the nature of activity concerned. 6