Prospects For Acquired Rights
| Author | Peter Curwen |
| Published date | 01 September 1999 |
| Date | 01 September 1999 |
| DOI | http://doi.org/10.1111/1467-9299.00170 |
PROSPECTS FOR ACQUIRED RIGHTS
PETER CURWEN
A notable feature of European Union Directives is that they are initially somewhat
loosely worded, necessitating constant (re)interpretation by the European Court of
Justice. This process may itself eventually necessitate the publication of a new ver-
sion of a Directive, once again creating tensions between member states. Few Direc-
tives illustrate this better than that concerned with the ‘acquired’ rights of
employees in the case of business transfers which has recently been revised more
than twenty years after its original publication. This article sets out to explore,
mainly in the context of the UK: the context and content of the original Directive;
its particular relevance for the increasingly popular practice of contracting out; the
role played by the European Court of Justice in both clarifying and, arguably, cloud-
ing the issues; the process of revising the Directive. It concludes with an assessment
of the current state of play.
INTRODUCTION
On 14 February 1977 the Council of the European Communities adopted
Council Directive 77/187/EEC (the Business Transfer (Acquired Rights)
Directive) on the approximation of the laws of the member states relating
to the safeguarding of employees’ rights in the event of transfers of under-
takings, businesses or parts of businesses. This legislation stemmed from
the first Community Social Action Programme of 1974 which set out to
ensure that economic growth, with its attendant restructuring of national
and multinational businesses, did not proceed at the expense of particular
segments of the Community workforce (More 1996, p. 126).
This Directive has undoubtedly been the most problematic of the various
Directives in the field of European social law. Over twenty years on, the
recent publication of a revised wording may finally have resolved most of
the outstanding issues although, as this paper sets out to demonstrate, it
has by no means resolved them all, and at least one actor in the lengthy
drama, the European Court of Justice, has yet to reveal its response to the
attempt by the European Commission and Council to restrict its freedom
to rule in relation to the scope of the Directive.
Because of the need to engender support from a wide variety of inter-
ested groups, including politicians, businessmen, unions and workers, the
Directive typically set out to establish basic ground-rules rather than
attempting to take account of every eventuality which might potentially
fall within its compass. Inevitably, this created a degree of uncertainty and
Peter Curwen is Professor in the Policy Research Centre of the Sheffield Business School.
Public Administration Vol. 77, No. 3, 1999 (599–619)
Blackwell Publishers Ltd. 1999, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street,
Malden, MA 02148, USA.
600 PETER CURWEN
confusion. Slowly, but surely, member states and the institutions of the
Community sought to clarify the intent of the Directive. Two main methods
were utilized for this purpose. First, the national courts in member states
sought clarification from the European Court of Justice (ECJ) under the
terms of Article 177 of the Treaty of Rome. This procedure takes the form of
questions laid before the ECJ which yield an initial opinion by an Advocate-
General that is subsequently either confirmed or (occasionally) over-ruled
by the ECJ. Secondly, the European Commission itself took member states
before the ECJ under the terms of Article 169 on the grounds that they had
failed to implement certain aspects of the Directive.
In practice, the Directive did not bear directly upon national arrangements
because all Directives need to be transposed into national law in each mem-
ber state. In the case of the UK, for example, this took the form of the
Transfer of Undertakings (Protection of Employment) Regulations 1981
(hereafter TUPE), as amended in the Trade Union Reform and Employment
Rights Act 1993 (hereafter TURER). There is an equivalent to TUPE in every
member state (see Commission of the European Communities 1997, Annex
IV for the full list). In certain cases, national employment protection regu-
lations similar to those enshrined in the Directive had preceded it by several
decades (as in the case of the French Labour Code – see More (1996) p. 147).
However, this was most notably not the case in respect of the UK, which
meant that the introduction of the Directive had far more impact there
initially compared with France.
Commencing in roughly 1985, the case law in the ECJ began to accumu-
late more rapidly and the mysteries of the Directive thereby began to
unravel. Whilst this is of importance to all member states, the workings of
the Directive are illustrated below primarily in the specific context of the
UK, partly because the effects there were unusually far-reaching; partly
because of its (somewhat undeserved) reputation as the member state least
willing to subjugate itself to the will of the Commission; partly because the
Directive has become intimately bound up with the process of contracting
out whereby local authorities, hospitals and government agencies are
obliged to put out to tender specified elements of their blue-collar and,
more recently, white-collar activities; and, finally, because the UK is
unusually active in making submissions to the ECJ about the Directive.
By the end of 1994, the accumulation of ECJ rulings appeared to have
reached the point where the remaining ambiguities were relatively trivial,
and there was widespread acceptance, even amongst its detractors, that the
Directive (and hence its national versions) applied to the vast majority of
transfers. However, in Spring 1995, a Danish court sent a case concerning
a Mr Rygaard to the ECJ (Ledernes). The Advocate-General’s opinion con-
firming the Directive’s applicability was over-ruled by the full ECJ in Sep-
tember, in the process creating a new climate of confusion. Further con-
fusion was then created by Merckz and compounded by Su
¨zen. On the face
of it, the foundations of the carefully constructed edifice of case law had
Blackwell Publishers Ltd. 1999
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