Have you, as an employee or works council member, been involved in a restart after bankruptcy, for example, as a result of a so-called pre-pack? And have you or your colleagues lost a job, or were you able to retain a job but had to forfeit salary and/or benefits? Then the following may be relevant to you.
There is currently a procedure pending before the European Court of Justice (the Estro case) concerning the so-called pre-pack procedure [1] Until recently, it was assumed that the pre-pack was part of an insolvency procedure, with the sale via the pre-pack being an exception to the main rule of a transfer of undertaking. However, in the Estro case, the Advocate General took the position that the current reorganization within the context of the pre-pack unfairly affects the rights of employees, so that (after all) a transfer of undertaking has occurred.
In the event of a transfer of undertaking, the employee's rights are automatically transferred and remain the same (including salary, vacation days, overtime pay, etc.) and the employee is also protected against dismissal on the basis of the transfer.
If the European Court of Justice upholds the aforementioned position, the consequence will be that the pre-packs already completed should not have resulted in employee rights being compromised. This will retroactively eliminate the basis for dismissal due to the pre-pack or the reduction of salary and/or benefits. In retrospect, this will then have to be corrected, which could have quite far-reaching consequences.
What can you do?
Caution is advised, as any claims may expire. Most claims expire after five years, but some even shorter. Therefore, it's important to prevent any statutes of limitations now. This can be done relatively easily, and we're happy to do it for you. We can also advise you on the next steps.
Please note: at this time, it is not yet possible to say with certainty what the final decision of the European Court will be. The Advocate General's conclusion therefore does not guarantee that any claims for affected employees will actually be forthcoming. However, interrupting the limitation period for any claims will not do any harm and will not result in any obligations or responsibilities for the employees concerned. Our motto is: no harm done!
If you would like to use our expertise for your potential claims, or would like further information, please contact Jennifer Horsten (j.horsten@wintertaling.nlWe can also provide Works Councils with on-site explanations about this issue and the transfer of business.
[1] In short, a pre-pack means that a court appoints a designated trustee before bankruptcy is declared, who then assesses the possibilities for restarting a company. The sale and transfer of the company takes place almost immediately after bankruptcy is declared.
