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The Dutch Supreme Court confirms; employees can claim applicability of future versions of an applicable collective labour agreement after a transfer of undertaking despite having agreed on different terms at the time of transfer

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Also in: Dutch

30-07-2024

On 12 July 2024, the Supreme Court confirmed that in the event of a transfer of undertaking, an employee may continue to rely on future versions of a collective labour agreement if this right is included as such in the employment contract and regardless of whether the new employer falls within the scope of this collective labour agreement. In addition, in line with previous rulings of the European Court of Justice, the Supreme Court ruled that employees can (voluntarily) waive such a right only after and not because of the transfer of undertaking. Therefore, agreeing on new conditions at the time of the transfer of undertaking, which often happens in practice, cannot prevent employees from (successfully) claiming terms and conditions of employment included in the new version of the collective labour agreement that applied to them at the time of the transfer, including, for instance an inflation adjustment, possibly years after the transfer of undertaking.

The ruling requires employers in the event of a transfer of undertaking to deal carefully with any changes to the terms of employment and to consider whether to amend the text of the incorporation clause in the standard employment contract used by them. In this news item, we discuss the Supreme Court ruling and its possible implications for practice.

Key insights

The Supreme Court confirmed that in a transfer of undertaking, an employee may continue to claim applicability of future versions of a collective labour agreement if this right is included as such in the employment agreement.

Employees can only waive this right (voluntarily) after and not because of/during the transfer of undertaking.

Partly in light of (high) inflation corrections that are nowadays included in new versions of collective labour agreements, the ruling may have significant implications for practice.

Corporate / M&A Employment & Benefits

Introduction

On 12 July 2024, the Dutch Supreme Court rendered an interesting ruling (ECLI:NL:HR:2024:1068) confirming, among other things, that an employee with whom a dynamic incorporation clause has been agreed in the employment agreement remains in principle entitled to future versions of the collective labour agreement (CLA) after a transfer of undertaking (TUPE), even after a TUPE to an employer that does not fall within the scope of the relevant collective labour agreement (CLA). The Dutch Supreme Court further confirmed that an agreement with employees whereby they waive a right as of the date of the TUPE, in this case the right of future versions of the CLA being applicable to the employment agreement and therefore also the future inflation correction, is an amendment due to or in connection with the TUPE and is therefore not allowed.

The Dutch Supreme Court overturned the ruling of the Court of Appeal of ‘s-Hertogenbosch ruling (ECLI:NL:GHSHE:2022:4106) and referred the case to the Court of Appeal of Arnhem-Leeuwarden to rule on the matter again. What is already clear, however, is that the outcome of this ruling will have consequences for the M&A-practice where, after a TUPE, a new employer is often keen to apply its own employment terms and conditions to the transferred employees as soon as possible after the TUPE, or at least not to be bound by future versions of a CLA that this new employer does not otherwise apply within its company/organisation itself. The ruling of the Dutch Supreme Court shows once again that this should be handled very carefully.

The ruling

In 2013, the Court of Justice of the European Union (CJEU) ruled in the Parkwood case that a provision of the employment agreement declaring future versions of the CLA applicable to the employment agreement loses some of its effect if a new employer does not fall within the scope of the CLA and therefore cannot participate in the negotiations of the new version(s) of the CLA. In the ruling, the CJEU ruled that in that situation, only the current version of the CLA applies to the employees' employment agreement, and not also its future versions. In the Asklepios case in 2017, the CJEU nuanced this ruling by ruling that, in the case of a TUPE, an employer is still bound by the provision declaring future versions of the CLA applicable, as long as the employer has the possibility under (national) law to amend the employees' terms and conditions of employment after the TUPE (this possibility must refer to both amendment by mutual agreement, as well as via an unilateral amendment) because not only the interests of the employees must be protected but also the interests of the employer.

The condition from the Asklepios case was subject to debate in the Netherlands. The question was whether the (unilateral) amendment possibilities provided for by Dutch law are not merely theoretical possibilities that hardly exist in practice. This is because there are such strict requirements in the Netherlands for an employer to unilaterally amend the employment conditions that in practice there is often no real and/or actual possibility for the employer to (unilaterally) amendment the employment conditions at all. Given the foregoing, the question at hand was whether the condition from the Asklepios case was met in the Netherlands.

The Dutch Supreme Court, following the conclusion of the Advocate-General Hartlief, concluded that Dutch employment law provides for (unilateral) amendment possibilities with article 7:613 of the Dutch Civil Code (the unilateral amendment clause) and the Stoof/Mammoet doctrine under article 7:611 of the Dutch Civil Code. Thus, according to the Dutch Supreme Court, Dutch law complies with the Asklepios case and the condition set out therein. We have our doubts about this ruling, as practice shows that employers are not allowed to actually unilaterally change employment conditions in almost any situation. However, the Dutch Supreme Court's ruling means that, in principle, a dynamic incorporation clause in TUPE transfers with it to the transferee in all situations, meaning that future versions of a CLA will remain applicable.

Another question on which the Dutch Supreme Court was requested to render its ruling on was whether, as of the date of the TUPE, an employee can voluntarily agree that the incorporation clause is no longer dynamic but static, meaning that no claim can be made with respect to the applicability of future (changed) versions of the CLA. The Dutch Supreme Court ruled that a dynamic incorporation clause is also a right that transfers as a result of a TUPE and, in line with previous CJEU rulings (such as in the Daddy's Dance Hall case), employees can only waive such a right after and not because of the TUPE. After the TUPE, the employer could then (in theory) amend the terms and conditions of employment (unilaterally). However, it is still unclear when an amendment of the terms and conditions of employment is after and not because of the TUPE (and thus not related to the TUPE). The mere passage of time appears to be (not always) sufficient.

Implications for practice

The situation at hand involved a TUPE and an amendment of the terms of conditions of employment that had taken place as of April 2015. Only after a high inflation correction was included in a newer version of the CLA, the employees started to object through the FNV. The FNV did not start proceedings until 20 February 2020. At first instance, the subdistrict court found that the workers were too late with their claim. The Court of Appeal of ‘s-Hertogenbosch disagreed with the subdistrict court, but ruled that since the workers themselves had waived their right of the future CLA being applicable, they could not claim any rights therefrom. With the Dutch Supreme Court's ruling, this ruling of the Court of Appeal of ‘s-Hertogenbosch is overruled and the employees are therefore still allowed to make a claim. This ruling may result in other employers being confronted with claims in relation to similar TUPE’s as well. Furthermore, in future TUPE’s, very careful consideration will have to be given to how to deal with any proposed amendments to employment conditions to ensure that the agreements made with employees are also upheld in court. We also recommend that employers amend the incorporation clause in the employment contract to ensure that any future versions do not automatically apply in all situations.

We will, of course, continue to monitor developments closely. Should you have any questions following the above news item or require legal advice, please feel free to contact us.