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

708 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 Considering the above explanation, there is no doubt that any legal transaction (therefore, a service contract as well) may constitute a legal title for the transfer of an undertaking. 14 The answer to a question of whether the Directive applies in a particular case of a legal transaction depends on what counts as a transfer of an undertaking or part of an undertaking. Point b of the first paragraph of Article 1 of the currently valid directive 15 states that 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." The assessment is therefore crucial of whether the transferred economic entity has retained its identity. For the purpose of this assessment, the Court of Justice of the EU has developed the so-called multi-factor test (a test based on several criteria). In the famous Spijkers case (C-24/85, 18 March 1986) the Court defined the following criteria as crucial: the type of undertaking or business to which the transfer refers; whether or not its tangible assets, such as buildings and movable property, are transferred; the value of its intangible assets at the time of the transfer; whether or not essential staff are taken over by the new employer; whether or not its customers are transferred; the degree of similarity between the activities carried on before and after the transfer; and the period, if any, for which those activities are suspended. The Court regularly refers to these criteria in its judgements. Despite the initial position of the Court of Justice of the EU that none of these criteria is decisive and that national courts must make an overall assessment of the situation, 16 the Court of Justice of the EU has actually focused on two criteria - the activity and the economic entity. These criteria are based on two conflicting notions of an undertaking - the first is an undertaking as an activity - labour-law approach - and the second is an undertaking as an organisation - commercial-law approach (Barnard, 2012: 592, 593). In earlier judgements, 17 the Court of Justice of the EU applied the labour-law test. It considered a question of whether the undertaking retained its identity, as indicated by the actual continuation or resumption of the same or similar activities by the new employer, as a crucial factor for the application of the Directive. This position has culminated in the case Schmidt (C-392/92, 14 April 1994). 18 A broad interpretation of the transfer of an undertaking, which was adopted in the judgement in this case, was the subject of criticism by employers, individual commentators and governments of the largest Member States (Jeffery, 2002: 692). This was probably the reason for the reversal of its position, which occurred in the case Süzen (C-13/95, 11 March 1997). 19 In that and the following judgements, the Court of Justice of the EU rejected the activity test. It took the view that the mere fact that the service provided by the previous contractor is similar to the service