A Danish cleaning company acquired the cleaning tasks at the Culture and Leisure Administration of Copenhagen Municipality and acquired a number of employees. The acquisition was therefore legally a transfer of business. The cleaning company was covered by a collective agreement and chose to renounce the collective agreement covering the transferred employees, which is possible under the Danish Transfer of Undertakings Act. The company did, however, as required still acknowledge the salary and employment terms of the old collective agreement until its expiration.
Shortly after the transfer the company terminated one of the transferred employees. The union subsequently brought action before the Dismissals Tribunal (Afskedigelsesnævnet) on behalf of the employee. However, the company was of the opinion that the case was governed by their own collective agreement under which the deadline for bringing legal action was exceeded.
The case was to be settled by industrial arbitration.
The employee was allowed to bring action
The arbitrator stated that all terms and conditions of the old collective agreement applied as individual terms and conditions until the expiration of the collective agreement, which included the clauses regarding disputes and procedure. This was the case even though the employee was covered by a new collective agreement while the old agreement was renounced. The employee could therefore bring the matter to the Dismissal Tribunal under the procedural rules of the old collective agreement.
iuno's opinion
The case shows that even though companies – in accordance with the Danish Transfers of Undertakings Act – can renounce a collective agreement in connection with a transfer of business, the renounced collective agreement can still be of relevance after the transfer. The reason is that the terms and conditions only cease to apply when the termination period of the agreement has expired.
iuno suggests that companies facing a purchase or sale of their business carry out a thorough review of the collective agreements and their impact on the transfer and the subsequent integration.
[Industrial Tribunal Decision of May 12, 2014]