On 28 October 2015, the Supreme Court ruled on the question whether the takeover of a company's canteen operation was covered by the Transfer of Undertakings Act ("Act") with the effect that the dismissal of an employee was considered unfair.

CLAIM FOR COMPENSATION FOR UNFAIR DISMISSAL OF CANTEEN EMPLOYEE

In 2011, the operation of the company's canteen was put up for tender and the company chose a new supplier. At the same time as the new supplier took over the canteen operation, the company moved to new premises at a new address and therefore also to a new canteen. The former supplier continued the canteen operation to a very limited extent.

After the new supplier's take-over, there was not sufficient work and a sandwich maker employed with the former supplier was therefore dismissed. The employee brought legal action against the two suppliers claiming compensation for unfair dismissal.

TAKEOVER OF THE CANTEEN'S ACTIVITIES NOT COVERED BY THE ACT

Initially, the Supreme Court repeated that it is decisive in accordance with the Directive behind the Act that "there is a transfer of a financial entity which retains its identity".

In practice, importance is attached to the following:

1) the type of company;
2) whether tangible assets are transferred, e.g. buildings and chattels;
3) whether the new owner takes over the majority of the labour force;
4) whether customers are transferred;
5) to what extent the activities are the same prior to and after the transfer; and
6) for how long the activities have been suspended.

The Supreme Court found that the company's canteen had been moved to a new address where a new kitchen had been established. The new supplier did therefore not take over any kitchen facilities or machines except for a few kitchen appliances.

Also, the new supplier did not take over any employees, and the Supreme Court therefore found (as did the Maritime and Commercial High Court) that a financial entity retaining its identity had not been transferred. The Supreme Court found in favour of both suppliers as the transfer was not covered by the Act.

COMMENTS

The Supreme Court ruling is not surprising. In a case concerning a hospital canteen (C-340/01, Carlito Abler), the European Court of Justice ruled on 20 November 2003 that it is decisive in relation to commercial kitchens and canteen operation whether physical activities are transferred from one company to another.

The Supreme Court ruling therefore observes the guidelines laid down by the European Court of Justice concerning transfer of canteen operation.

contacts

Jonas Enkegaard

Partner

Maria Schmiegelow

Attorney