Opinion of Advocate General Tanchev delivered on 6 December 2017.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• ECLI: ECLI:EU:C:2017:943
• Date: 06 December 2017
• Docket Number: C-472/16
• Procedure Type: Cuestión prejudicial - inadmisible

OPINION OF ADVOCATE GENERAL

TANCHEV

delivered on 6 December 2017(1)

Case C‑472/16

Jorge Luís Colino Sigüenza

v

Ayuntamiento de Valladolid

IN-PULSO MUSICAL Sociedad Cooperativa

Administrador Concursal de Músicos y Escuela S.L.

Músicos y Escuela S.L.

FOGASA

(Request for a preliminary ruling from the Tribunal Superior de Justicia de Castilla y León (High Court of Justice, Castilla y León, Spain))

(Reference for a preliminary ruling — Transfer of an undertaking — Prohibition of dismissal by reason of transfer — Dismissal for economic reasons – Directive 2001/23/EC – Expiring concession to run a music school –Loss of a service contract to a competitor –Economic entity – Economic entity which retains its identity – Collective dismissal – Right to an effective remedy – Article 47 of the Charter on Fundamental Rights of the EU)

1. This is a reference for a preliminary ruling from the Sala de lo Social del Tribunal Superior de Justicia de Castilla y León in Valladolid (Social Division of the High Court of Justice, Castilla y León, Valladolid, ‘the Tribunal Superior’) which concerns a request for re-employment by a music teacher previously employed by a company that was running a municipal music school. Shortly before the City Council selected another company to run the school, the appellant in the main proceedings was laid off.

2. After a long line of cases dealt with by the Court, this request once again raises the question under what circumstances the loss of a service contract to a competitor is to be regarded as a transfer of an economic entity within the meaning of Council Directive 2001/23/EC of 12 March 2001 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 (‘the Directive’), such as to require the new contractor to take over staff of the previous contractor. The specific features of the case at hand are a concession that expired before the competitor took over the activity in question, a delay of five months before the competitor resumed the activity and the fact that none of the persons employed by the appellant’s employer were taken over.

3. The referring court also raises a procedural question: as the first music school was laying off all of its staff, a collective dismissal procedure took place, in the course of which the collective statutory representatives unsuccessfully challenged the employer’s decision. The Tribunal Superior queries whether it would infringe Article 47 of the Charter of Fundamental Rights of the European Union (‘Charter’), if the individual employee was bound by a judgment given in these collective proceedings in which he was unable to be a party and defend his rights under the Directive.

I. Legal framework

A. European Union law

4. The first and second paragraphs of Article 47 of the Charter provide as follows:

‘Everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this Article.

Everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law. Everyone shall have the possibility of being advised, defended and represented.’

5. Points (a) and (b) of Article 1 of the Directive state:

‘(a) This Directive shall apply to any transfer of an undertaking, business, or part of an undertaking or business to another employer as a result of a legal transfer or merger.

(b) Subject to subparagraph (a) and the following provisions of this Article, there is a transfer within the meaning of this Directive where there is a transfer of an economic entity which retains its identity, meaning an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.’

6. The first subparagraph of Article 3(1) of the Directive reads:

‘The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee.’

7. The first subparagraph of Article 4(1) of the Directive provides:

‘The transfer of the undertaking, business or part of the undertaking or business shall not in itself constitute grounds for dismissal by the transferor or the transferee. This provision shall not stand in the way of dismissals that may take place for economic, technical or organisational reasons entailing changes in the workforce.’

B. National law

8. Article 124 of the Law regulating the Social Courts (Ley reguladora de la Jurisdicción Social, ‘LJS’) states in paragraphs 1 and 13:

‘1. The employer’s decision may be challenged by the employees’ statutory representatives by means of the proceedings provided for in the following paragraphs.

…

13. When the proceedings concern an action brought by an individual before the Juzgado de lo Social (Social Court) against a dismissal, Articles 120 to 123 of this Law shall apply, subject to the following special provisions: … (b) If, pursuant to the preceding paragraphs, the employees’ representatives bring an action against the employer’s decision after the commencement of proceedings brought by an individual, those proceedings shall be suspended until a decision has been taken in the action brought by the employees’ representatives, which, once it is final, shall have the force of res judicata with regard to the individual proceedings, in accordance with Article 160(5) of this Law.’

9. Article 160(5) of the LJS provides:

‘A final judgment shall have the force of res judicata with regard to individual actions which are pending, or which may be brought, and which concern the same subject matter or are directly related thereto, whether the actions have been brought before the social or the administrative courts. Those actions shall therefore be suspended for the duration of the collective action. An order for suspension shall be made even if judgment has been given at first instance and an appeal or an appeal in cassation is pending, the competent court being bound by the final judgment given in the collective action, even though the inconsistent or contradictory nature of that final judgment has not been invoked in appeal proceedings the purpose of which is to ensure consistency in the case-law.’

II. Facts in the main proceedings and the question referred for a preliminary ruling

10. Jorge Luis Colino Sigüenza (‘the appellant’) started working as a music teacher at the Municipal Music School (‘the School’) of Valladolid on 11 November 1996.

11. Initially, the School was run by the Ayuntamiento de Valladolid (the Municipality of Valladolid, ‘the Ayuntamiento’).

12. In 1997, the Ayuntamiento stopped managing the School directly and put out a call for tenders for its management. On this basis, the contract was awarded to Músicos y Escuela, S.L. (‘Músicos’), a company which had been incorporated on 7 July 1997 with a share capital of ESP 500 000 (approximately EUR 3 000) and whose company object was teaching music, organising performances and selling musical instruments; ultimately, the sole purpose of the company was to take part in the tendering procedures organised by the Ayuntamiento. (2) Músicos took over the facilities, premises and resources for providing the services, recruited some of the staff of the Ayuntamiento, including the appellant, and carried on the music school’s activity as the Municipal Music School, which continued to be considered a service provided by the Ayuntamiento to local citizens.

13. In the following years, the City Council, acting on behalf of the Ayuntamiento, called for tenders on a regular basis, namely in September 2000, September 2004, July 2008 and September 2012. (3) Músicos continued to win the tenders. (4) Its last contract covered the period until 31 August 2013, and provided for a possibility of express prolongation for a further academic year.

14. Due to a sharp decline in the number of pupils at the beginning of the academic year 2012/13, (5) a difference between the fees being paid by the pupils and the price of the service agreed between the Ayuntamiento and Músicos became apparent. When, in December 2012, Músicos sought compensation for that difference in an amount of more than EUR 100 000, (6) the City Council refused to pay.

15. In those circumstances, on 19 February 2013, Músicos sought termination of the contract for non-performance by the Ayuntamiento and damages. The City Council in turn rejected these claims, pled non-performance on the part of the other party, urging it to continue to provide the service agreed upon until the end of the academic year 2012/13, and also refused to return the deposit of EUR 15 000 that Músicos had given for the use of the equipment and premises.

16. In response to the economic situation produced by the dispute with the City Council, on 4 March 2013, Músicos initiated a collective dismissal procedure. After the obligatory period of negotiation and consultation, which did not result in an agreement with the employees’ representatives, Músicos, on 27 March 2013, adopted the decision to dismiss its entire staff. On 31 March 2013, Músicos ceased its activity and, on 1 April 2013, it returned possession of the premises, instruments and resources that had been made available to the School by the City Council. On 4 April 2013, the company issued a notice of dismissal to all its staff, including the appellant, with effect from 8 April 2013. Thus, Músicos dismissed 26 employees, that is, 23 teachers and 3 administrative employees. (7)

17. The workforce delegates (elected representatives of the company’s staff) challenged Músico’s collective dismissal decision before the Tribunal Superior, where a hearing took place on 22 May...