The Danish Act on Transfer of Undertakings

Case no. 228/2014
Judgment delivered on 24 May 2016

3F acting for A and others
vs.
DI acting for Brande Buslinier ApS

Brande Buslinier ApS won the contract for the operation of a bus service previously operated by Skjern Bilen. The drivers used for the bus service by Skjern Bilen were all transferred to Brande Buslinier. However, Brande Buslinier did not take over the buses used by Skjern Bilen, but leased other buses for the bus service. Soon after, Skjern Bilen was declared bankrupt, and the drivers were not paid for the work for Skjern Bilen during the last month. The issue was whether Brande Buslinier's takeover of the bus service amounted to a transfer of undertakings within the meaning of the Act on Transfer of Undertakings with the effect that Brande Buslinier had assumed the obligation to pay the wages owing to the drivers from Skjern Bilen. If the takeover was not covered by the Act, the question was whether Brande Buslinier still had an obligation to secure the drivers their rights under the Act according to the agreement with the tenderer, Midttrafik, and hence whether the drivers could rely on the agreement.

The Act should be interpreted in accordance with the Directive on Transfers of Undertakings. According to the Directive, there is a transfer "where there is a transfer of an economic entity which retains its identity".

The Supreme Court held that the Act on Transfer of Undertakings did not apply in a situation as this one, where no significant physical elements for the operation of the bus service had been transferred from Skjern Bilen to Brande Buslinier, as the latter had not taken over buses, but only ticket tables, driver's bags, coin tables and change of a total value of approx. DKK 61,000.

In addition, the Supreme Court held that there was no basis for interpreting the contract between Midttrafik and Brande Buslinier to mean that Brande Buslinier had taken over the obligations under the Act on Transfer of Undertakings in relation to Skjern Bilen's staff, regardless of whether a transfer of undertakings had taken place within the meaning of the Act.

The High Court had reached the same conclusion.