Lex localis - Journal of Local Self-Government_11(1)_January

L EX LOCALIS - J OURNAL OF L OCAL S ELF -G OVERNMENT D. Senčur Peček, S. Laleta & S. Kraljić: Labour Law Implications of Outsourcing in Public Sector 707 businesses or parts of businesses 4 was adopted with the aim to ensure adequate protection of employees, 5 and was later amended by Directive 98/50/EC amending Directive 77/187/EEC. 6 Both directives were repealed and replaced by a new Directive 2001/23/EC on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event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 (hereinafter: the Directive). 7 The Directive establishes three pillars when it comes to the safeguarding of employees' rights: automatic transfer of the employment relationship with all the rights and obligations from the transferor to the transferee; a protection of employees against dismissal by the transferor or the transferee; and an obligation of the transferor and the transferee to inform and consult the representatives of employees (Barnard, 2012: 579). The Directive, which was implemented into Slovenian legal system with Employment Relationship Act (ERA-1) 8 and into Croatian legal system with Labour Act (LA), 9 often was and still is under consideration by the Court of Justice of the EU in preliminary ruling procedure. 10 These procedures often address a question of application of the Directive, i.e. a question of whether the undertaking is (may be) transferred in a particular case. According to Article 1 of the Directive, the 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" (point a. of the first paragraph). 11 The Court of Justice of the EU has interpreted the notion of a legal transfer in a very broad manner. According to an extensive case law, the transfer of an undertaking (or part of an undertaking) occurs not only on the basis of a contract of sale of the undertaking, but also on the basis of some other contract, e.g. a lease contract or contract for the assignment of services. 12 In terms of the contractual assignment of services, we can identify three groups of cases, all of which (according to decisions of the Court of Justice of the EU) may fall within the scope of the Directive. 13 The first group includes cases where the contracting authority decides that it will no longer carry out certain activity itself, but delegates the activity with a contract to an outside contractor instead - contracting out or outsourcing (Watson Rask, C-209/91, 12 November 1992), the second group includes cases of succession of service contracts, where upon the expiry of the contract with the first contractor the contracting authority assigns provision of the same service to another contractor (Süzen, C-13/95, 11 March 1997), and the third group includes cases where upon the expiry of the contract with the contractor the contracting authority once again carries out the activity with his or her own employees - in-sourcing (Hidalgo and Others, C-173/96 and C-247/96, 10 December 1998).