2010/7/14 - 21 Cdo 2520/2009 (summary)

Czech Republic – Supreme Court – Decision No. 21 Cdo 2520/2009 – Jul 14, 2010

(devolution of rights and obligations under employment relationships – Directive 2001/23/EC)

The Plaintiff’s employer (the First Defendant) and the Second Defendant entered into an Agreement on the Assignment of Publishing Rights. Among other things, the purpose of the agreement was to assign certain rights and obligations under employment relationships. The Plaintiff sought a judgment ordering the Defendants to pay an amount of compensation equal to three monthly salaries with respect to the period of time during which the Plaintiff was not assigned work and paid salary by the employer. According to the Plaintiff, the immediate termination of employment by the Second Defendant was invalid, since the employment relationship with the First Defendant still existed.

The then-current wording of Section 249(2) of Act No. 65/1965 Coll., the Labor Code, was implemented into Czech law as a result of Council Directive 77/187/EEC 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 (now it is Council Directive 2001/23/EC). Pursuant to the above provision, where an employer or a part thereof is transferred, or where an employer’s activities or responsibilities or a part thereof are transferred to another employer, the employees’ rights and obligations under employment relationships shall devolve in their entirety on the transferee employer. At the same time, Section 249(1) provides that rights and obligations under employment relationships may only devolve where this is provided for in this Act or in a special law.

The Supreme Court arrived at the conclusion that the Agreement on the Assignment of Publishing Rights was not an agreement on the transfer of an undertaking, as defined in Section 487 of the Commercial Code. In addition, however, the Court ruled that if a part of responsibilities or activities was transferred under said agreement, the consequence in the form of devolution of rights and obligations under employment relationships could not be denied only because of its origin in an agreement entered into between a transferor employer and a transferee employer. On these, as well as other grounds, the Supreme Court partially vacated the judgments of lower courts and remanded the case to the court of first instance for further proceedings.