Company Succession

Regarding the maintenance of workers' rights, in the event of the transfer of companies, activity centers or parts of activity centers, it must be in accordance with the provisions of Union (European) law to the extent that there is no clear contradiction and insoluble with the national regulation. For these purposes, the jurisprudence (precedents) of the Court of Justice of the European Communities is based not on the concept of transfer of assets, but on business continuity, as a productive activity identifiable as an organization with its own substantivity.

A consequence of the above is that the contractual subrogation ope legis determined by article 44 of the Spanish Worker's Statue and the Union Directives, also operate in certain cases in which there is no transfer of assets between the two companies. Indeed, to determine whether or not there has been a succession, it is not decisive whether there was a legal transaction between the two companies or whether the transfer involves a set of organized material elements, but whether there has been a change in the ownership of an identifiable economic exploitation, for whose purposes, the transmission of material means, is one more element to take into account, but not the only one.

As of the Supreme Court Sentence of 10-27-2004, our High Court, came to break its previous doctrinal current, in relation to the succession,of companies beginning to apply since then the interpretation of the European Directives, made by the Court of Justice of the EU.

However, and despite the incorporation of the EU doctrine, it must be remembered that, even when a company assumes a substantial part of the workforce of another company, the workforce is only one more element that must be valued together with the others that concur in the configuration of the productive unit that is the object of transmission, that is, when it is essentially composed of the workers' persons and not by material means assigned to production, the workforce will be a determining criterion, but it will be secondary when the productive unit is made up of other material elements of relevant importance, so each specific case should be carefully studied, always without criteria of generality.