Vol 15 (2018) - Issue 1

Article preview

ECJ in FNV v Smallsteps, or: Acquired Rights Directive v Pre-Packs

In Federatie Nederlandse Vakvereniging and Others v Smallsteps BV, the European Court of Justice ('ECJ') held that the Acquired Rights Directive ('ARD') applies to the transfer of an undertaking by way of a Dutch 'pre-pack' insolvency sale. This requires Member States to give effect to the ARD regime in the context of such procedures. In particular, they must safeguard the contractual rights of employees and prohibit their dismissal. The main practical consequence of FNV v Smallsteps is that (Dutch) pre-packs may not be used as a restructuring tool to effect staff cuts (anymore). Thus far, it appears that most commentators took the decision as confirmation of the treatment of pre-pack administrations under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ('TUPE'). This article suggests that taking a closer look at a particular ratio decidendi of the judgement may well lead to a different conclusion. Yet, it ultimately argues that the regulation of UK pre-packs is consistent with the ARD – for what it may be worth in light of the imminent 'Brexit'.