The court was asked to give a preliminary ruling concerning the interpretation of Directive 2001/23 Article 3. The dispute in the main proceedings involved a private-sector undertaking, Parkwood, which had taken on staff formerly employed by a local authority.

The employment contracts of those employees provided that the contract would be in accordance with the collective agreements negotiated by the National Joint Council. The issue was whether Parkwood was bound by a new collective agreement which had been reached after the transfer of the undertaking to it.

The question referred was whether Directive 2001/23 Article 3 had to be construed as precluding a Member State from providing, in the event of a transfer of an undertaking such as that at issue, that dynamic clauses referring to collective agreements negotiated and agreed after the date of transfer were enforceable against the transferee.

The ECJ stated that the Charter of Fundamental Rights required the freedom to conduct a business, which covers freedom of contract. Where, as in this case, the transferee is unable to participate in the collective bargaining its contractual freedom is so reduced so as to limit its freedom to conduct a business. Article 3 must therefore be interpreted as precluding Member States from providing that collective agreements negotiated after the transfer are enforceable where the transferee does not have the possibility of participating in the negotiation of the agreements.

The ECJ left open the possibility of enforcing dynamic clauses where the transferee is part of the collective bargaining arrangements. http://bit.ly/15rO4rQ