To hire or not to hire: the ambivalent impact of social rehire clauses on the Transfer of Undertakings Directive

Abstract

Most EU countries are experiencing an increased use of Collective Labour Agreement clauses – Social Rehire Clauses – that oblige incoming service providers, while taking over a service, to employ all or part of outgoing providers’ personnel or at least give these workers priority future hiring. In the established case law of the Court of Justice, rehiring personnel is considered a crucial element, which may trigger the application of Council Directive 2001/23 on transfers of undertakings. This article defends the need to keep Social Rehire Clauses outside the material scope of the Directive, in order to respect social partners’ collective autonomy and prevent opportunistic behaviours, while promoting a fair competition between employers. Constitutionally justified under Article 3(3) TEU, and Articles 9, 147 and 151(1) TFEU, the protection of employment pursued by Social Rehire Clauses should be interpreted as legitimate limitation to the economic freedoms enshrined in the Treaties and the Charter of Fundamental Rights.