This reference for a preliminary ruling concerned the interpretation of Art. 1(1) of the (revised) Transfer of Undertakings Directive (Directive 2001/23).
The question had arisen in the course of legal proceedings brought by CLECE SA against Mrs Martín Valor and the Ayuntamiento de Cobisa (municipal authority of Cobisa (pictured right)) concerning Mrs Martín Valor’s dismissal.
On 27 May 2003, CLECE, a company that supplies cleaning services, entered into a contract with the Ayuntamiento de Cobisa for the cleaning of schools and premises belonging to the council.
Pursuant to that contract, Mrs Martín Valor was employed by CLECE as a cleaner from 25 March 2004. On 9 November 2007, the Ayuntamiento de Cobisa informed CLECE that it was terminating its contract with that company with effect from 31 December 2007.
On 2 January 2008, CLECE informed Mrs Martín Valor that, as of 1 January 2008, she would become a member of the staff of the Ayuntamiento de Cobisa, since that body would henceforth carry out the cleaning of the premises in question. According to CLECE, pursuant to Art. 14 of the Collective Agreement concerning workers employed in the cleaning of buildings and premises in Toledo, the Ayuntamiento de Cobisa had taken over from that company all the rights and obligations relating to the employment relationship forming the subject of the dispute in the main proceedings.
On the same day, Mrs Martín Valor presented herself for work at the premises of the Ayuntamiento de Cobisa, but was not permitted to carry out her work there. CLECE, for its part, did not offer her an alternative job.
On 10 January 2008, the Ayuntamiento de Cobisa hired five workers to clean its premises, through an employment agency.
Mrs Martín Valor then brought an action against CLECE and the Ayuntamiento de Cobisa, seeking a founding of unlawful dismissal.
The referring court asked, in essence, if Art. 1(1)(a) and (b) of Directive 2001/23 must be interpreted as meaning that that directive applied to a situation in which a municipal authority which had contracted out the cleaning of its premises to a private company decided to terminate its contract with that company and to undertake those cleaning services itself, by hiring new staff for that purpose.
The Court first of all pointed out that, pursuant to Art. 1(1)(c) of Directive 2001/23, that directive applied to public undertakings engaged in economic activities whether or not they were operating for gain.
The Court reiterated that the mere fact that the person to whom the activity was transferred was a public-law body, in this case a municipal authority, could not be a ground for excluding the existence of a transfer within the scope of that directive (see Case C-175/99 Mayeur  and Case C-151/09 UGT-FSP ).
Therefore, the fact that, as in the dispute in the main proceedings, one of the parties was a municipal authority did not, of itself, prevent Directive 2001/23 from applying.
Pursuant to Art. 1(1)(a) of Directive 2001/23, that directive applied 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.
The Court reiterated the scope of that provision could not be determined solely on the basis of a textual interpretation, primarily because of the differences between the language versions of that directive and the divergences between the laws of the Member States with regard to the concept of legal transfer (see, inter alia, Case C-458/05 Jouini and Others ).
The Court therefore found that it could not automatically be excluded that Directive 2001/23 might apply in circumstances such as those of the dispute in the main proceedings, where a municipal authority unilaterally decided to terminate a contract with a private undertaking and to carry out itself the cleaning work it used to contract out to that undertaking.
Nonetheless, according to Art. 1(1)(b) of Directive 2001/23, a condition for the application of that directive was that the transfer must concern an economic entity which retained its identity after the change of employer.
In order to determine whether such an entity retained its identity, it was necessary to consider all the facts characterising the transaction in question, including in particular the type of undertaking or business concerned, whether or not its tangible asset, such as buildings and movable property, were transferred, the value of its intangible asset at the time of the transfer, whether or not the majority of its employees were taken over by the new employer, whether or not its customers were transferred, the degree of similarity between the activities carried on before and after the transfer, and the period, if any, for which those activities were suspended. However, all those circumstances were merely single factors in the overall assessment which must be made and could not therefore be considered in isolation.
The Court held that it was of no consequence whether the majority of employees were taken on following a legal transfer negotiated between the transferor and the transferee, or whether it was the result of a unilateral decision made by the former employer to terminate the employment contracts of the transferred employees, followed by a unilateral decision made by the new employer to take on the majority of the same employees to carry out the same work.
The Court held that the mere fact that the activity carried out by CLECE and that carried out by the Ayuntamiento de Cobisa were similar, even identical, did not lead to the conclusion that an economic entity had retained its identity. An entity could not be reduced to the activity entrusted to it. Its identity emerges from several indissociable factors, such as its workforce, its management staff, the way in which its work was organised, its operating methods or indeed, where appropriate, the operational resources available to it. The Court held that, in particular, the identity of an economic entity, such as that forming the subject of the dispute in the main proceedings, which was essentially based on manpower, could not be retained if the majority of its employees were not taken on by the alleged transferee.
The Court concluded that notwithstanding any national protection rules, the mere taking over by the Ayuntamiento de Cobisa, in the dispute in the main proceedings, of the cleaning work that was previously carried out by CLECE, could not, of itself, indicate the existence of a transfer pursuant to Directive 2001/23.