At the end of 2015, the German Federal Employment Court submitted a request to the European Court of Justice. It concerned the effect of a transfer of undertaking on a clause in an employment contract that “dynamically” refers to a collective bargaining agreement, i.e. refers to a collective bargaining agreement as amended from time to time.
In the case before the court, the parties agreed in the employment contract that the provisions of a collective bargaining agreement should apply. The reference to the provisions of the collective bargaining agreement was “dynamic”, with the result that the employment contract not only referred to the current version of the collective bargaining agreement, but also to all supplementary, changing and replacing collective bargaining agreements. Under current German case law, such contractual references continue to be “dynamic” even after a transfer of undertaking, i.e. the transfer of a business unit to a new owner, who by law, becomes the employer of the employees employed in that business unit.
Meanwhile, the Attorney General of the European Court of Justice presented his opinion on this case. The Attorney General proposed that maintaining the dynamic nature of the reference after a transfer of undertaking is contrary to Article 3 para. 3 of the Directive 2001/23/EC. The referral is instead subject to the temporal limits of Article 3 para. 3 of the Directive, which can be set by the member states and shall not be less than one year. During this time, the new employer must maintain the working conditions provided in the collective bargaining agreement. In the opinion of the Attorney General, this applies irrespective of whether the transferor was normally bound to the collective bargaining agreement or merely on the basis of the contractual reference clause. The decision of the European Court of Justice is still pending. The court is not bound by the statement of the Attorney General, but his opinion is generally accepted.