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PR(10)05: Reasoned opinion sent to Iceland for failure to ensure transfer of unpaid wages


The EFTA Surveillance Authority has decided to issue a reasoned opinion 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.[1]

Directive aims at safeguarding the rights of employees when an undertaking is transferred to a new employer. In such circumstances, Article 3(1) of the Directive provides that obligations owed by the transferred employees, arising from their contracts of employment, shall be transferred from their previous employer to the new employer. The Directive has been implemented into Icelandic law by 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 employer was therefore not liable to pay wages owed to workers earned during their employment with the previous employer.

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.

The purpose of the reasoned opinion is to give Iceland a last chance to take corrective measures before the Authority decides whether to bring the matter before the EFTA Court. Iceland has been given two months to take the measures necessary to comply with the reasoned opinion.


For further information, please contact:

Mr Ingvar Sverrisson
Internal Market Affairs Directorate
Tel. (+32)(0)2 286 18 83

Brussels, 24 Febraury 2010


[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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