- 13 Nov 2015
- Søren Eeg Hansen
The Danish Supreme Court recently affirmed that the transfer of a canteen contract to another operator following a tender process did not fall within the scope of the Danish Transfer of Undertakings Act.
The Danish Transfer of Undertakings Act applies to the transfer of an undertaking or part of an undertaking, meaning an economic entity which retains its identity. In the test of whether a transfer is a transfer within the meaning of the Act, an overall assessment of all facts surrounding the transfer must be made. This was the issue in this case before the Danish Supreme Court.
The case concerned a large accountancy firm with a lunch canteen operated by an external canteen operator. In connection with a relocation to a new domicile, the accountancy firm invited tenders for the canteen contract. A new canteen operator won the contract to operate the canteen at the new domicile with effect from the date of the accountancy firm's relocation.
However, the original canteen operator continued operating the canteen at the accountancy firm's former address without any changes, a canteen that also served other businesses with hungry employees and customers. The original canteen operator used the same kitchen and the same facilities – only a mixer and a vending machine were brought along to the new domicile.
The accountancy firm's relocation resulted in a considerable loss of revenue for the original canteen operator at the former address. The original canteen operator therefore had to dismiss a number of employees. In this connection, there was a discussion of whether it was in conflict with the Danish Transfer of Undertakings Act to dismiss the employees.
No transfer of undertaking
One of the affected employees believed that this was a transfer within the meaning of the Act, given the fact that the regular customers, the operation of the canteen and the task of serving of lunch to 6-700 people had transferred to the new canteen operator. It was therefore a case of unfair dismissal.
The new canteen operator did not agree, since there had been no transfer of operating equipment or employees. Instead, it argued, the deciding factor should be the fact that the canteen as such had relocated and that the former canteen kitchen was still being used by the former canteen operator.
The Supreme Court sided with the new canteen operator, thus affirming the judgment of the Maritime and Commercial High Court, and noted that the test of whether the Act is applicable or not must be based on well-established case law from the EU Court which provides that all facts surrounding the transfer must be taken into account.
The Supreme Court emphasised that the original canteen operator had continued providing its canteen services without any changes and using the same operating equipment as before, and that there had been no transfer of assets or employees (except for an employee who had now become a waiter). Accordingly, there was no transfer within the meaning of the Act.
Norrbom Vinding notes
- that with its judgment, the Danish Supreme Court has emphasised that the test of whether a transfer is a transfer within the meaning of the Danish Transfer of Undertakings Act must include an overall assessment of all facts surrounding the transfer; and
- that with the judgment, it is once again established that the transfer of a contract is not in itself sufficient to qualify as a transfer within the meaning of the Danish Transfer of Undertakings Act.