The Industrial Court has ruled that the Danish Transfer of Business Act also includes public servants covered by a collective agreement.

Background

The case concerned a number of firemen previously employed as public servants with Gentofte Fire Service under the Municipality of Gentofte. In connection with a business transfer from Gentofte Fire Service to Falck, the question was raised as to whether Falck was obligated under the Transfer of Business Act (the Act) to comply with the collective agreement regulating the employment of the firemen employed as public servants.

The parties agreed that the situation was to be considered a business transfer as defined in the Act. A number of firemen employed under a collective agreement were transferred, and Falck regulated their employment terms in accordance with the current collective agreement until the expiry thereof. However, the parties disagreed as to whether the Act should apply in the same way to the public servants who were voluntarily transferred for employment with Falck under a collective agreement, or whether Falck was entitled to regulate the former public servants according to Falck's previous collective agreement which was less favourable for the employees.

Prior to the transfer, the public servants could choose between accepting employment with Falck or being placed in another appropriate position within the municipality. Most of the public servants chose to be transferred to Falck.

The Act

It is provided by the Act that if a company or a part thereof is transferred, the acquirer assumes directly the rights and obligations existing at the time of the transfer under the collective agreement, provisions on terms of employment and pay determined or approved by a public authority, and individual agreements concerning terms of employment and pay.

Findings

First of all, the Court found that the Act, under its terms, cannot be considered to exempt salaried employees employed as public servants from protection under the Act.

Secondly, the Court found that, as regards the rights under the collective agreement, there is no basis for assuming that the Act does not apply in relation to the former firemen employed as public servants.

The Court noted that this could only lead to the result that the firemen had voluntarily let themselves be transferred to Falck, and consequently, the Court ruled that in this case, the Act also applies to public servants covered by a collective agreement.

Consequences

The ruling establishes that, in specific cases, the Act applies to public servants with the result that the acquirer – taking over and employing public servants as part of a tender – is obligated to comply with the rights and obligations of the collective agreement covering the public servants prior to the transfer.

However, the ruling does not imply that public servants' special rights under municipal regulations, including the right to public service pension, redundancy payment, etc., are to be transferred.

Nor does the ruling imply that public servants are obligated to let themselves be transferred thereby waiving the rights under the regulations.

The content of this Newsletter is not, and should not replace, legal advice.

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