{ "attribution": { "source": "legal.exploreworldai.com", "canonical": "https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-234-98", "cite_as": "NovaCopilot, legal.exploreworldai.com (https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-234-98)", "license": "https://legal.exploreworldai.com/revision", "version": "legal-2026-10-13", "fingerprint": "ewai:eu:a03983", "proof": "sha256:de791360f85c4c912245a0d6d414868ed6b4d30de2b80c9d7070878b435fd916", "jurisdiction": "eu", "lang": "en", "publisher": "NovaCopilot by ExploreWorld Legal", "terms": "https://legal.exploreworldai.com/om" }, "brand_source": "Source: NovaCopilot", "item": { "schema_version": "1.0.0", "id": "eu:c-234-98", "jurisdiction": "eu", "lang": "en", "brand_source": "Source: NovaCopilot", "brand": { "product": "NovaCopilot", "platform": "ExploreWorldAI", "infrastructure": "ExploreWorld Legal", "infrastructure_url": "legal.exploreworldai.com", "legal_entity": "Valkiv Ventures AB", "permanent_url": "https://legal.exploreworldai.com/novacopilot", "source": "Source: NovaCopilot", "powered_by": "Powered by NovaCopilot", "license": "https://legal.exploreworldai.com/licensvillkor" }, "sections": [ { "title": "Front matter", "paragraphs": [ "para_1", "para_2", "para_3", "para_4", "para_5", "para_6" ], "kind": "front_matter" }, { "title": "Summary", "paragraphs": [ "para_7", "para_8", "para_9", "para_10", "para_11", "para_12", "para_13", "para_14", "para_15", "para_16" ], "kind": "summary" }, { "title": "Summary", "paragraphs": [ "para_17", "para_18", "para_19", "para_20", "para_21", "para_22", "para_23", "para_24", "para_25", "para_26", "para_27", "para_28", "para_29", "para_30", "para_31", "para_32", "para_33", "para_34", "para_35", "para_36", "para_37", "para_38", "para_39", "para_40", "para_41", "para_42" ], "kind": "summary" }, { "title": "Judgment", "paragraphs": [ "para_43" ], "kind": "assessment" }, { "title": "Grounds", "paragraphs": [ "para_44", "para_45", "para_46", "para_47", "para_48", "para_49", "para_50", "para_51", "para_52", "para_53", "para_54", "para_55", "para_56", "para_57", "para_58", "para_59", "para_60", "para_61", "para_62", "para_63", "para_64" ], "kind": "assessment" }, { "title": "The first part of the first question", "paragraphs": [ "para_65", "para_66", "para_67", "para_68", "para_69", "para_70", "para_71", "para_72", "para_73", "para_74", "para_75" ], "kind": "assessment" }, { "title": "The second part of the first question and the second question", "paragraphs": [ "para_76", "para_77", "para_78", "para_79", "para_80", "para_81", "para_82", "para_83", "para_84", "para_85", "para_86", "para_87", "para_88", "para_89", "para_90", "para_91", "para_92", "para_93", "para_94", "para_95" ], "kind": "assessment" }, { "title": "Costs", "paragraphs": [ "para_96", "para_97", "para_98" ], "kind": "costs" }, { "title": "On those grounds,", "paragraphs": [ "para_99", "para_100", "para_101", "para_102", "para_103", "para_104" ], "kind": "operative" } ], "paragraphs": [ { "text": "EUR-Lex - 61998J0234 - EN", "paragraph_id": "para_1" }, { "text": "Avis juridique important", "paragraph_id": "para_2" }, { "text": "|", "paragraph_id": "para_3" }, { "text": "61998J0234", "paragraph_id": "para_4" }, { "text": "Judgment of the Court (Fifth Chamber) of 2 December 1999. - G. C. Allen and Others v Amalgamated Construction Co. Ltd. - Reference for a preliminary ruling: Industrial Tribunal, Leeds - United Kingdom. - Safeguarding of employees' rights in the event of transfers of undertakings - Transfer within a group of companies. - Case C-234/98.", "paragraph_id": "para_5" }, { "text": "European Court reports 1999 Page I-08643", "paragraph_id": "para_6" }, { "text": "Summary", "paragraph_id": "para_7" }, { "text": "Parties", "paragraph_id": "para_8" }, { "text": "Grounds", "paragraph_id": "para_9" }, { "text": "Decision on costs", "paragraph_id": "para_10" }, { "text": "Operative part", "paragraph_id": "para_11" }, { "text": "Keywords", "paragraph_id": "para_12" }, { "text": "1 Social policy - Approximation of laws - Transfers of undertakings - Safeguarding of employees' rights - Directive 77/187 - Applicability to a transfer between companies in the same group", "paragraph_id": "para_13" }, { "text": "(Council Directive 77/187)", "paragraph_id": "para_14" }, { "text": "2 Social policy - Approximation of laws - Transfers of undertakings - Safeguarding of employees' rights - Directive 77/187 - Scope - Company belonging to a group which subcontracts works contracts to another company in the same group - Included - Conditions", "paragraph_id": "para_15" }, { "text": "(Council Directive 77/187)", "paragraph_id": "para_16" }, { "text": "Summary", "paragraph_id": "para_17" }, { "text": "1 Directive 77/187 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 businesses can apply to a transfer between two companies in the same group.", "paragraph_id": "para_18" }, { "text": "In contrast to competition law, nothing justifies a parent company's and its subsidiaries' uniform conduct on the market having greater importance in the application of the Directive than the formal separation between those companies which have distinct legal personalities. That outcome, which would …", "paragraph_id": "para_19" }, { "text": "2 Directive 77/187 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 businesses applies to a situation in which a company belonging to a group decides to subcontract works contract …", "paragraph_id": "para_20" }, { "text": "Parties", "paragraph_id": "para_21" }, { "text": "In Case C-234/98,", "paragraph_id": "para_22" }, { "text": "REFERENCE to the Court under Article 177 of the EC Treaty (now Article 234 EC) by the Leeds Industrial Tribunal, United Kingdom, for a preliminary ruling in the proceedings pending before that court between", "paragraph_id": "para_23" }, { "text": "G.C. Allen and Others", "paragraph_id": "para_24" }, { "text": "and", "paragraph_id": "para_25" }, { "text": "Amalgamated Construction Co. Ltd", "paragraph_id": "para_26" }, { "text": "\"on the interpretation of Council Directive 77/187/EEC of 14 February 1977 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 businesses (OJ 1977 L 61, p. 26),", "paragraph_id": "para_27" }, { "text": "THE COURT", "paragraph_id": "para_28" }, { "text": "(Fifth Chamber),", "paragraph_id": "para_29" }, { "text": "composed of: D.A.O. Edward, President of the Chamber, J.C. Moitinho de Almeida, C. Gulmann, J.-P. Puissochet (Rapporteur) and P. Jann, Judges,", "paragraph_id": "para_30" }, { "text": "Advocate General: D. Ruiz-Jarabo Colomer,", "paragraph_id": "para_31" }, { "text": "Registrar: L. Hewlett, Administrator,", "paragraph_id": "para_32" }, { "text": "after considering the written observations submitted on behalf of:", "paragraph_id": "para_33" }, { "text": "- Mr Allen and other applicants, by J. Hendy QC and M. Ford, Barrister, instructed by L. Christian, Solicitor,", "paragraph_id": "para_34" }, { "text": "- Amalgamated Construction Co. Ltd, by P. Duffy QC and G. Clarke, Barrister, instructed by W. Burton, Solicitor,", "paragraph_id": "para_35" }, { "text": "- the United Kingdom Government, by M. Ewing, of the Treasury Solicitor's Department, acting as Agent, assisted by K. Smith, Barrister,", "paragraph_id": "para_36" }, { "text": "- the French Government, by K. Rispal-Bellanger, Head of Subdirectorate at the Legal Affairs Directorate of the Ministry of Foreign Affairs, and A. de Bourgoing, Chargé de Mission in the same directorate, acting as Agents,", "paragraph_id": "para_37" }, { "text": "- the Commission of the European Communities, by C. Docksey and P. Hillenkamp, Legal Advisers, acting as Agents,", "paragraph_id": "para_38" }, { "text": "having regard to the Report for the Hearing,", "paragraph_id": "para_39" }, { "text": "after hearing the oral observations of Mr Allen and other applicants, of Amalgamated Construction Co. Ltd, of the United Kingdom Government and of the Commission at the hearing on 16 June 1999,", "paragraph_id": "para_40" }, { "text": "after hearing the Opinion of the Advocate General at the sitting on 8 July 1999,", "paragraph_id": "para_41" }, { "text": "gives the following", "paragraph_id": "para_42" }, { "text": "Judgment", "paragraph_id": "para_43" }, { "text": "Grounds", "paragraph_id": "para_44" }, { "text": "1 By decision of 5 May 1998, received at the Court on 3 July 1998, the Leeds Industrial Tribunal referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) two questions on the interpretation of Council Directive 77/187/EEC of 14 February 1977 on the appro …", "paragraph_id": "para_45" }, { "text": "2 The questions arose in proceedings brought by Mr Allen and 23 other mineworkers against Amalgamated Construction Co. Ltd (hereinafter `ACC').", "paragraph_id": "para_46" }, { "text": "3 ACC is a British company involved in the mining industry. For approximately 20 years it has driven tunnels and drifts for coal-mine owners to enable them to get at and extract minerals. For this purpose mine owners regularly issue invitations to tender for a defined package of work. Although there is no guarantee of renewal, the contracts concluded tend to be renewed indefinitely, so that ACC has never lost a contract in a competitive tendering process.", "paragraph_id": "para_47" }, { "text": "4 ACC is a wholly-owned subsidiary of AMCO Corporation plc (hereinafter `the AMCO Group'). The AMCO Group comprises some 12 companies, which include one other wholly-owned subsidiary, AM Mining Services Ltd (hereinafter `AMS'). AMS was set up in 1993 to carry out work connected with pit closures, su …", "paragraph_id": "para_48" }, { "text": "5 AMS progressively diversified its activities, obtaining work which was incidental to the underground driveage work, such as the cleaning and maintenance of drifts. In particular, it took on such work at the Prince of Wales Collieries in Yorkshire. ACC already had a presence at that site where it c …", "paragraph_id": "para_49" }, { "text": "6 In August 1994 and again in March 1995, ACC, whose contracts were coming to an end, submitted bids for further contracts for driveage work at the Prince of Wales Collieries. The terms of the bid in each case were that the work would be subcontracted to AMS whose labour costs were lower than those …", "paragraph_id": "para_50" }, { "text": "7 In 1994 and 1995, the workers dismissed by ACC received redundancy payments and were then engaged by AMS. However, since on each occasion ACC did not complete its driveage work until after AMS had commenced its own, it was difficult, during that transitional period, to ascertain for which of the two companies the workers concerned were working.", "paragraph_id": "para_51" }, { "text": "8 As subcontractor for the driveage work, AMS was able to use all the plant and equipment which first British Coal and then RJB had previously made available to ACC, such as washing and canteen facilities and the equipment required for disposal of excavated materials, transporting equipment and underground driveage.", "paragraph_id": "para_52" }, { "text": "9 Subsequently, however, RJB expressed concern about the terms and conditions of employment being provided by its various contractors, including AMS, believing that they were the reason for lack of motivation of employees of those undertakings. At RJB's suggestion, ACC decided not to subcontract to …", "paragraph_id": "para_53" }, { "text": "10 Mr Allen and his co-workers thought that they were entitled to the conditions of employment which ACC had provided before they left for AMS and brought an action before the Industrial Tribunal. In support of their claims they submitted that, under the Transfer of Undertakings (Protection of Emplo …", "paragraph_id": "para_54" }, { "text": "11 Taking the view that the case depended on the interpretation of the Directive, the Leeds Industrial Tribunal decided to suspend proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:", "paragraph_id": "para_55" }, { "text": "`1. Is the Acquired Rights Directive (77/187/EEC) capable of applying to two companies in the same corporate group which have common ownership, management, premises and work, or are such companies a single undertaking for the purpose of the Directive? In particular, can there be a transfer of an undertaking for the purposes of the Directive when Company A transfers a substantial part of its labour force to Company B in the same corporate group?", "paragraph_id": "para_56" }, { "text": "2. If the answer to Question 1 is in the affirmative, what are the criteria for deciding whether there has been such a transfer? In particular, has there been a transfer of undertaking in the following circumstances:", "paragraph_id": "para_57" }, { "text": "(a) over a period of time the workers involved have been dismissed from Company A, purportedly for redundancy, and offered employment with associated Company B carrying out a geographically distinct undertaking or part of the undertaking of Company A, namely the driving of mine tunnels;", "paragraph_id": "para_58" }, { "text": "(b) no transfer of premises, management, infrastructure, materials or assets occurred between Company A and B and the majority of significant assets used by both companies in the work of driving main tunnels is supplied by a third party, the mine operator;", "paragraph_id": "para_59" }, { "text": "(c) company A remains the sole contractor with the third party client which engaged it to work on construction projects which were undertaken on a \"rolling\" basis;", "paragraph_id": "para_60" }, { "text": "(d) there was little or no contemporaneity between the movement of the workers from Company A to Company B and the beginning and/or end of the contracts under which the work was performed;", "paragraph_id": "para_61" }, { "text": "(e) company A and company B share the same management and premises;", "paragraph_id": "para_62" }, { "text": "(f) after being employed by Company B the employees carry out work for both Companies A and B as needed by the local management who are responsible for both companies;", "paragraph_id": "para_63" }, { "text": "(g) the work undertaken was continuous, there was no suspension of activities at any time or any change in the manner in which they were conducted?'", "paragraph_id": "para_64" }, { "text": "The first part of the first question", "paragraph_id": "para_65" }, { "text": "12 By the first part of its first question, the referring court asks whether the Directive can apply to a transfer between two companies in the same corporate group which have the same ownership, the same management and the same premises and are engaged in the same work.", "paragraph_id": "para_66" }, { "text": "13 Mr Allen and the other applicants, the French Government, the United Kingdom Government and the Commission propose that this question should be answered in the affirmative. They point out that Article 2 of the Directive defines a `transferor' and a `transferee' as, respectively, any natural or le …", "paragraph_id": "para_67" }, { "text": "14 ACC, on the other hand, contends that the Directive cannot apply to a transfer between two companies which have the same ownership, management and supervisory staff and do not enjoy real autonomy from one another in determining their course of action on the market. Such companies are considered t …", "paragraph_id": "para_68" }, { "text": "15 According to Article 1(1), the Directive it is to apply to the transfer of an undertaking, business or part of a business to another employer as a result of a legal transfer or merger. Article 2(a) and (b) of the Directive define a `transferor' and a `transferee' as any natural or legal person who, by reason of a transfer within the meaning of Article 1(1), ceases to be, or respectively becomes, the employer in respect of the undertaking, business or part of the business.", "paragraph_id": "para_69" }, { "text": "16 The Directive is therefore applicable where, following a legal transfer or merger, there is a change in the natural or legal person responsible for carrying on the business who by virtue of that fact incurs the obligations of an employer vis-à-vis employees of the undertaking, regardless of wheth …", "paragraph_id": "para_70" }, { "text": "17 It is thus clear that the Directive is intended to cover any legal change in the person of the employer if the other conditions it lays down are also met and that it can, therefore, apply to a transfer between two subsidiary companies in the same group, which are distinct legal persons each with …", "paragraph_id": "para_71" }, { "text": "18 That conclusion is not affected by the judgment in Viho v Commission, cited above, in paragraphs 15 to 17 of which the Court held that Article 85(1) of the EC Treaty (now Article 81(1) EC) does not apply to relations between a parent company and its subsidiaries where those companies form a singl …", "paragraph_id": "para_72" }, { "text": "19 That concept of undertaking is specific to competition law and reflects the fact that, without the concordance of economically independent wills, relations within an economic unit cannot constitute an anti-competitive agreement or concerted practice between undertakings within the meaning of Article 85(1) of the Treaty.", "paragraph_id": "para_73" }, { "text": "20 Nothing justifies a parent company's and its subsidiaries' uniform conduct on the market having greater importance in the application of the Directive than the formal separation between those companies which have distinct legal personalities. That outcome, which would exclude transfers between co …", "paragraph_id": "para_74" }, { "text": "21 The answer to be given to the first part of the first question must therefore be that the Directive can apply to a transfer between two companies in the same corporate group which have the same ownership, management and premises and which are engaged in the same works.", "paragraph_id": "para_75" }, { "text": "The second part of the first question and the second question", "paragraph_id": "para_76" }, { "text": "22 By the second part of its first question and its second question, the referring court is essentially seeking to ascertain the criteria for determining the existence of a transfer and whether those criteria are satisfied in the present case.", "paragraph_id": "para_77" }, { "text": "23 The aim of the Directive is to ensure continuity of employment relationships within an economic entity, irrespective of any change of ownership. The decisive criterion for establishing the existence of a transfer within the meaning of the Directive is whether the entity in question retains its id …", "paragraph_id": "para_78" }, { "text": "24 First of all, in order for the Directive to be applicable, the transfer must relate to a stable economic entity whose activity is not limited to performing one specific works contract (Case C-48/94 Rygaard [1995] ECR I-2745, paragraph 20). The term `entity' thus refers to an organised grouping of persons and assets facilitating the exercise of an economic activity which pursues a specific objective (Süzen, cited above, paragraph 13).", "paragraph_id": "para_79" }, { "text": "25 It is for the referring court to establish, in the light of the interpretative criteria set forth above, whether the driveage work carried out by ACC at the Prince of Wales Collieries was organised in the form of an economic entity before that undertaking subcontracted that work to AMS.", "paragraph_id": "para_80" }, { "text": "26 Second, in order to determine whether the conditions for the transfer of an economic entity are met, it is necessary to consider all the facts characterising the transaction in question, including in particular the type of undertaking or business, whether or not its tangible assets, such as build …", "paragraph_id": "para_81" }, { "text": "27 So, the mere fact that, in the instant case, the service provided by the undertaking holding the contracts for driveage work and then by the undertaking to which the work was then subcontracted is similar does not warrant the conclusion that an economic entity has been transferred between the fir …", "paragraph_id": "para_82" }, { "text": "28 As pointed out in paragraph 26 above, the national court, in assessing the facts characterising the transaction in question, must take into account, among other factors, the type of undertaking or business concerned. It follows that the degree of importance to be attached to each criterion for de …", "paragraph_id": "para_83" }, { "text": "29 The Court has thus held that, since in certain sectors in which the activity is based essentially on manpower, a group of workers engaged in a joint activity on a permanent basis may constitute an economic entity, such an entity is capable of maintaining its identity after it has been transferred …", "paragraph_id": "para_84" }, { "text": "30 Although, as far as this case is concerned, the driving of underground tunnels cannot be considered to be an activity based essentially on manpower since it requires a significant amount of plant and equipment, it is clear from the order for reference that, in the mining sector, it is common for …", "paragraph_id": "para_85" }, { "text": "31 Nor can the fact that ACC was always RJB's sole contractor and subcontracted the work to AMS preclude in itself the existence of a transfer within the meaning of the Directive. First, the transfer of customers between transferor and transferee is only one factor amongst others in the overall asse …", "paragraph_id": "para_86" }, { "text": "32 As regards the fact that the re-engagement of ACC's employees by AMS did not coincide with the beginning or end of the contracts, it must be observed that, as the Commission points out, a transfer of an undertaking is a complex legal and practical operation which may take some time to complete. F …", "paragraph_id": "para_87" }, { "text": "33 Moreover, even if a temporary suspension of the undertaking's activity does not of itself preclude the possibility that a transfer has taken place (see Ny Mølle Kro, cited above, paragraph 19), the fact that the work was performed continuously, with no interruption or change in the manner of performance, is none the less a normal feature of transfers of undertakings.", "paragraph_id": "para_88" }, { "text": "34 The fact that ACC and AMS share the same management and the same premises and that there was no transfer of management staff between the two companies cannot preclude the existence of a transfer in so far as the transaction between the two subsidiaries actually involved an economic entity within the meaning of the case-law of the Court.", "paragraph_id": "para_89" }, { "text": "35 The referring court also points out that the workers dismissed by ACC and taken on by AMS subsequently worked for both companies according to the needs of the local management running the two companies. However, as the Advocate General observes at point 40 of his Opinion, the Court does not have …", "paragraph_id": "para_90" }, { "text": "36 However, ACC submits that the facts of the case are in any event comparable to those of Rygaard, cited above, in which the Court held that there is no transfer where one undertaking merely makes available to another certain workers and material for carrying out certain works.", "paragraph_id": "para_91" }, { "text": "37 It is true that in Rygaard the Court held that the situation in which an undertaking transfers to another undertaking one of its building works with a view to the completion of that work, confining itself to providing the latter undertaking with certain workers and equipment to carry out the work …", "paragraph_id": "para_92" }, { "text": "38 It is for the referring court to establish, in the light of all the interpretative criteria, whether in the case of which it is seised a transfer has taken place.", "paragraph_id": "para_93" }, { "text": "39 The answer to the second part of the first question and the second question must therefore be that the Directive applies to a situation in which a company belonging to a group decides to subcontract to another company in the same group contracts for driveage work in mines in so far as the transac …", "paragraph_id": "para_94" }, { "text": "Decision on costs", "paragraph_id": "para_95" }, { "text": "Costs", "paragraph_id": "para_96" }, { "text": "40 The costs incurred by the United Kingdom and French Governments and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the actions pending before the national court, the decision on costs is a matter for that court.", "paragraph_id": "para_97" }, { "text": "Operative part", "paragraph_id": "para_98" }, { "text": "On those grounds,", "paragraph_id": "para_99" }, { "text": "THE COURT", "paragraph_id": "para_100" }, { "text": "(Fifth Chamber),", "paragraph_id": "para_101" }, { "text": "in answer to the questions referred to it by the Leeds Industrial Tribunal by decision of 5 May 1998, hereby rules:", "paragraph_id": "para_102" }, { "text": "1. Council Directive 77/187/EEC of 14 February 1977 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 businesses can apply to a transfer between two companies in the same group which have the same ownership, management and premises and which are engaged in the same works.", "paragraph_id": "para_103" }, { "text": "2. Directive 77/187 applies to a situation in which a company belonging to a group decides to subcontract to another company in the same group contracts for driveage work in mines in so far as the transaction involves the transfer of an economic entity between the two companies. The term `economic entity' refers to an organised grouping of persons and assets facilitating the exercise of an economic activity which pursues a specific objective.", "paragraph_id": "para_104" } ], "operative_part": "in answer to the questions referred to it by the Leeds Industrial Tribunal by decision of 5 May 1998, hereby rules:\n\n1. 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