European Court of Justice- triangular employment relationships

On 6 September 2022, a recent request for a preliminary ruling made by the Court of Budapest,wasdeclared manifestly inadmissible for lack of sufficient information (Mara-Tóni Bt., C-244/22, EU:C:2022:674).

The request is concernedwith framing the scope of the concept of temporary agency work, and ifrelevant, with the interpretation of Article 1 first paragraph of Directive 2001/23/EC on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses.

It must be recalled that in ALB FILS KLINIKEN (C-427/21), the Federal Labour Court of Germany (Bundesarbeitsgericht) seeks to clarify whether “supply of staff” (in the meaning of outsourcing), falls under the scope of Directive 2008/104/EC on temporary agency work. The application initiating proceedings was lodged on 14 July 2021 (the date of the hearing is yet to be released).

In C-244/22 (Mara-Tóni Bt):

  • a workerwas successively employed by a craft cooperative, then by a company A, subsequently by a company B, then again by the company A (without conclusion of a new employment contract), subsequently by the company B, and finally by a company C
  • for a long period, the worker carried out the same tasks at the same place of work, under the direction and control of the same persons (apparently under the authority of the company A), i.e., factually work was carried out for a single company
  • the companies B and C have concluded subcontracting agreements with the company A, such agreements being limited to supply of staff

The employers are closely linked through their managers and shareholders.

After being dismissed by the company C, the worker brought an action before the referring court seeking compensation for notice and severance payment considering the whole period of employment. He argues that from the perspective of the Act I of 2012 on the Labour Code, each of his employers was the legal successor to the precedent employer.

The referring court wonders whether situations in which the formal employer and the factual employer are different, fall under the concept of temporary agency work (in the meaning of Directive 2008/104/EC on temporary agency work).

An answer will be expected if the referring court will enforce the right to submit a new reference for a preliminary ruling.

Considering the facts in the main proceedings in the light of EU law:

Article 1.1 of Directive 2008/104/EC on temporary agency work defines its scope, and Article 3.1 (b) defines a “temporary work agency.” The concept of “temporality” is intrinsic to both (see inter alia the Judgment of 14 October 2020, JH vs VG, C-681/18, EU:C:2020:823 paragraph 61).

Referring to the “meaning of temporality,” Advocate General Tanchev emphasised that: “Article 1(1) concerns temporary agency workers who are assigned to a user undertaking ‘to work temporarily.’ In other words, and as the Commission contends in its written observations, this wording suggests that it is the employment relationship between the temporary agency worker and the user undertaking that is temporary….” (Opinion delivered on 9 September 2021, C-232/20, NP v Daimler AG, Mercedes-Benz Werk Berlin, EU:C:2021:727, paragraph 39).

As regards “the applicability of the Directive to companies which are not temporary work agencies but occasionally second staff by placing it under the supervision and direction of another undertaking: Article 1(2) states that the Directive applies to undertakings ‘which are temporary work agencies’ and Article 3(1)(b) contains an autonomous definition of the notion of ‘temporary work agency’. Consequently, the Directive may in certain situations be applicable to employers in spite of their not being qualified as temporary work agencies under national law. However, this may only be the case when the entity under consideration fulfils the conditions laid down in Articles 1 and 3 and, thus, must be considered as a temporary work agency in the meaning of the Directive.” (European Commission- Employment, Social Affairs & Inclusion-Unit B2-Labour law -Report -Expert Group-Transposition of Directive 2008/104/EC on temporary agency work-August 2011-pages 8 and 9).

The latter reference is concerned with lawful hiring out by companies which are not temporary work agencies.

Prima facie, the case at hand does not fall under the scope of Directive 2008/104/EC.

In the same context, another question would be whether the triangular employment relationships (companies A,B and the worker, and respectively A, C and the worker) constitute unlawful hiring out of workers (unlawful transfer to a user ofapart of the employer’s authority that is normally exercised by the actual employer).

The fact that the companies B and C are only “formal employers” is apparently not contested by the parties. The sole factual employer is the company A.

It appears that the companies B and C are not registered in the capacity of staff leasing and recruitment agencies.

The main registered activities are electrical installation (companies A and B), and data processing, web hosting service (company C).

Moreover, regardless of the concept of employer, are employment contracts factually not performed (the worker was “hired” by the companies B and then C, in view of staffing the company A, company to which the worker was always subordinated), and a challengeable notice of terminationsufficient to determine authority exercised by the former companies (and could have been subsequently transferred to the company A)?

Pursuant to the Belgian Court of Cassation’s jurisprudence “the exercise of authority in an employment contract obviously implies the power of direction and supervision, even if this power is not actually exercised” (14 Janvier 2002          , R.G. n° S.000.183.F).

From the perspective of ECJ case-law (where applicable),the genuine employer must be first determined (see inter aliaJudgment of 15 December 2011, Voogsgeerd, C‑384/10, EU:C:2011:842, paragraphs 49,62 and 64, Opinion of Advocate General Pikamae of 26 November 2019, AFMB Ltd and Others ,C-610/18, EU:C:2019:1010, paragraphs 46 and 47,Judgment of 16 July 2020 AFMB Ltd and Others, C-610/18, EU:C:2020:565, paragraph 80).

The arrangement in the case at handseams to take somewhat advantage of the lack of recognition and regulation of an existing form of triangular employment relationship (employment of record).

Provided that such workers are deemed temporary agency workers, the referring court asks whether they constitute an economic entity in the meaning of Article 1 Directive 2001/23/EC (i.e., a defined group of human resources that carries out work at the same workplace over a long period, under one and the same management).

It appears that employees havechanged employers of their own will.

The entitlement to severance pay occurs upon termination by the employer,ordue to dissolution of the employer without succession, or uponterminationby the employee as a consequence of a transfer of undertaking.

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