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PR(09)87: Infringement proceedings against Iceland for failure to ensure transfer of unpaid wages


The EFTA Surveillance Authority has decided to issue a letter of formal notice to Iceland owing to its failure to ensure correct implementation of the obligations arising from Article 3(1) of the Directive on Transfer of Undertakings.

Article 3 of the Directive on Transfer of Undertaking[1]aims at safeguarding rights of employees in cases of transfer of undertakings. Article 3(1) of the Directive provides that existing obligations arising from a contract of employment shall be transferred from the seller to the buyer of the company (the new employer). Article 3 of the Directive has been implemented into Icelandic law (Act No. 72/2002).

On 24 February 2005, the Icelandic Supreme Court handed down a judgment in Case No 375/2004, “Blaðamannafélag Íslands gegn Frétt ehf.” in which the Court interpreted the relevant national rules implementing the Directive. The Court held that a claim for unpaid wages which fell due before the transfer could not be based on the national rules implementing the Directive. The new employers were thus not liable to pay the wages owed to a worker.

Referring to case law of the European Court of Justice and of the EFTA Court, the Authority considers that Article 3(1) of the Directive must be interpreted as meaning that after the date of transfer, the buyer automatically is liable for all obligations arising under employment contracts.

Consequently, the Authority takes the view that the national measures, as interpreted by the Supreme Court of Iceland, do not fully guarantee the mandatory rights of workers as laid down in Article 3 of the Directive. In the letter of formal notice the Authority invites the Government of Iceland to submit its observations on the matter.


For further information, please contact:

Mr. Ólafur Einarsson
Senior Officer
Legal & Executive Affairs
tel. (+32)(0)2 286 18 73

Mr. Bjørnar Alterskjær
Deputy Director
Legal & Executive Affairs
tel. (+32)(0)2 286 18 98

Brussels, 4 December 2009


[1]Directive 2001/23/EC on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses.

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