Employee transfer agreement signed in cash in transit sector

Social partners in the French cash in transit sector signed an agreement last November, which came into force on 1 January 2012, setting out a process for transferring employees in the event of the loss of a service contract to a competitor. The agreement goes beyond the requirements of EU Directive 2001/23. Employees who agree to the transfer would be employed under the same conditions and receive the same salary at the new company. The General Confederation of Labour did not sign.

Background

Social partners signed an agreement on 7 November 2011 with the aim of ensuring job stability in the cash in transit sector and avoiding unfair competition based on salaries and working conditions.

Signing the agreement were the Union of Transport Federations (UFT), representing the cash in transit sector employer’s federation (FEDESFI), and major trade unions representing sector employees, with the exception of the General Confederation of Labour (CGT).

According to the agreement, if the rules covering transfer of an undertaking are not applicable, any company that gains a service contract from another must recruit some of the workers employed by the original service contractor. The employees must be paid the same salary. The new employer must also take into account seniority accumulated with the former employer.

The agreement should be extended, which means it will cover all companies and employees of the sector in France.

The agreement is of particular interest as it goes beyond the requirements of the EU Acquired Rights Directive 2001/23, relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses.

In the context of activities involving transport, employees are in principle not transferable. This stems from the interpretation of a directive by the European Court of Justice (ECJ), which ruled in 2001 in Case C-172/99 (608Kb PDF) that activities involving the transportation of goods or persons may not be classified as ‘economic entities’ in the meaning of the directive, since no tangible assets are transferred.

This ECJ case covers the situation in which a service contract is lost to a competitor in the cash in transit sector, where usually no vehicles or tangible assets are taken over by the new contractor.

Therefore, according to the new collective agreement in the sector, the French social partners have voluntarily applied the principles of the Acquired Rights Directive.

Voluntary application of employee transfer

The collective agreement sets out that the number of employees transferred will depend on the turnover of the activity subject to the service contract.

For instance, for the transportation activity itself, one employee would be transferred per €70,000 of turnover and one manager per €700,000 of turnover must also be transferred.

The agreement sets out a method to select the employee(s) to be transferred that uses the objectively evaluated criteria of family situation, age and seniority. In addition, only employees who are employed on an indefinite contract and are not away from work for more than four months can be selected.

The list of employees to be transferred must be communicated to the new company within a maximum of 15 days following the loss of the service contract. Failure to do so will mean that the employees are not transferred.

Prior agreement of the employees

When employees are transferred, they are subject to a new employment contract with their new employer. The contract will, however, include the main elements of the former employment contract, including qualifications, seniority and the job classification system used for determining pay.

The rate of pay should also remain the same, calculated on the basis of the average pay over the previous 12 months. The average shall include bonuses but not additional overtime pay. The new employer has 15 days before the start of activity to prepare a draft employment contract.

Employee representatives at the new company are informed of the arrival of new employees and the new employees have 10 days in which to agree the new contract.

Going beyond the minimum requirements of the Acquired Rights Directive 2001/23, the new collective agreement states that transfer is subject to the prior agreement of the employees concerned. The new employer must also ensure that the occupational social security package will be at least equivalent to that provided in the sectoral agreement. From the first day of transfer, the transferred employees are covered by any collective agreement(s) applicable at the new employer’s company. Annual leave, however, is not transferred and is replaced by an allowance equivalent to the salary that would have been paid if the employee had taken their leave. The transferred employees will receive at least one day of training in their new company and at least one day of familiarisation with the applicable safety rules.

Commentary

Despite the intentions of the social partners in reaching this agreement, some issues remain unresolved.

Firstly, it is unclear whether the decision not to allow the transfer of annual leave contradicts Directive 2003/88 concerning certain aspects of the organisation of working time, and a 2006 ruling of the ECJ on the provision of annual leave (560Kb PDF), that observes that the positive effect that leave has on the health and safety of the worker becomes apparent when it is taken in the year it is prescribed.

According to Article 7(2) of Directive 2003/88, the minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated. However, it is unclear whether the contract can really be considered terminated when the employment relationship continues on the same basis with a new employer.

Secondly, there is also a question regarding the age criterion for determining which employees should be transferred. It is not clear whether taking the age of a worker into account can be justified. Directive 2000/78 (129Kb PDF) establishes a general framework for equal treatment in employment and occupations, and declares that all discrimination based on age should be prohibited throughout the European Community.

Jean-Philippe Lhernould, Human and Employment Research Agency (HERA)

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