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

710 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 depends on whether or not the majority of employees were taken over by the transferee. Taking over employees, which is supposed to be a consequence of the application of the Directive, also becomes a condition determining whether the Directive applies. The inadequacy of such interpretation of the notion of a transfer of an undertaking was noted by several Advocates General in their Opinions, 24 and was criticised by the theory as well (Beltzer, 2007; Barnard, 2012; Titze, 2015). Another problem concerning the application of the Directive in the case of outsourcing arises from the fact that the Court of Justice of the EU (which adopted a position that either the transfer of assets or the transfer of employees is crucial for a decision on the existence of identity of the economic entity, in addition to the performance of the same activity) did not provide any clear guidelines in relation to the assessment of whether a particular activity is to be placed among the activities based on assets or among the activities based on employees. 25 As demonstrated by several recent cases before the Court of Justice of the EU relating to the transfer of services, the interpretation of the Directive is still not clear in this regard and is causing problems for employees and employers in the Member States (Jeffery, 2002: 693; Schaub, et al., 2009: 1194; Thüsing, 2013: 114, 115). 3 Transfer of an undertaking in the case of outsourcing in Croatian and Slovenian law Under Croatian legislation, the protection of employees’ rights in the event of the transfer of an undertaking is regulated by Croatian Labour Act under the concept of the “transfer of (employment) contracts to a new employer”. According to Article 137/1: “In the event of transfers of undertakings, economic activities or parts of undertakings or economic activities, retaining their economic integrity, to a new employer, as a result of the change of status or a legal transaction, all contracts of employment of the workers employed with the undertaking or part of undertaking being transferred, respectively who are connected with the economic activities or part of economic activities being transferred, are transferred to the new employer.” According to the LA, the transfer of contracts takes place (besides the transfers of undertakings or parts of undertakings) in the event of “a transfer of economic activity (businesses) (or parts of economic activity, businesses)”. The formulation “economic activity” used in LA does not seem appropriate. An undertaking can have more establishments (in German law, Betrieb ) in which one or more activities that are the object of business of the holder of undertaking are being performed. Establishment is a part of an undertaking which has all three elements that an undertaking has, but relates to only one part thereof (Barbić, 2002: 24). This notion of establishment allows for the conclusion that it would be more appropriate to use the term establishment (part of the establishment) than