Netherlands: Recent Judgment on Transfer of Undertaking without the Takeover of Aircrafts by KLM
After KLM became the sole shareholder of Martinair, Martinair’s cargo division and KLM’s cargo division were integrated. After the integration, Martinair no longer carried any ‘own’ cargo but was engaged by other airlines as a carrier. All other activities were transferred to KLM and the (ground) staff concerned joined KLM. However, KLM has not offered an employment contract to the cargo pilots (approximately 220) of Martinair. These employees claimed that there had been a transfer of undertaking, on the basis of which the employees had entered the employment of KLM by operation of law and with retention of employment conditions. Both the District Court and the Court of Appeal rejected the claims of the employees. The Supreme Court reversed this judgment and instructed the Court of Appeal to reassess all factual circumstances of the integration.
Subsequently, the Court of Appeal ruled that there was indeed a transfer of undertaking and considered the following: the Court of Appeal is of the opinion that there is an exploitation of Martinair by KLM, whereby the economic risk lies with KLM and Martinair is commercially entirely dependent on KLM, its only ‘customer’. Martinair is, after all, a 100% subsidiary of KLM and its management board consists of KLM employees. Martinair no longer has its own organisation. In fact, KLM has full control over the extent to which and the manner in which Martinair is deployed.
In addition, the Court of Appeal finds that KLM has actual control over the aircraft of Martinair and that KLM in fact operates those aircraft as part of KLM’s business. KLM is, after all, the owner of three of the four aircraft used for cargo transport. Furthermore, KLM determines how, where and when the fleet is used. Therefore, the requirement that there is a transfer of (the control over) the aircraft from Martinair to KLM is fulfilled. The fact that there has been no direct transfer of ownership of aircraft to KLM does not detract from this. According to the Court of Appeal, in the event of a transfer of undertaking, the transfer of the material (aircraft) must be regarded as the most important element.
On the basis of the foregoing, the Court of Appeal ruled that there is a transfer of undertaking and declared that the cargo pilots are employed by KLM by operation of law and that all rights and obligations arising from the employment contract between the cargo pilots and Martinair have been transferred to KLM.