Lex localis - Journal of Local Self-Government_11(1)_January

706 L EX LOCALIS - J OURNAL OF L OCAL S ELF -G OVERNMENT D. Senčur Peček, S. Laleta & S. Kraljić: Labour Law Implications of Outsourcing in Public Sector 1 Introduction In recent decades, factors such as a rapid technological development, globalisation and the economic crisis have significantly affected the organisation of work and work-related relationships. Among other things, employers have been increasingly resorting to contractual delegation of certain (usually secondary) functions or activities to outside contractors. 1 This also applies to employers in the public sector, who are interested in outsourcing, which is supposed to contribute to the reduction of labour costs, because of budgetary costs (Berlinski, 2008; Dube and Kaplan, 2010). Certain tasks are performed as a service by outside contractors or by employees of these contractors instead of public employees employed by local self-government institutions and other public entities. The phenomenon of outsourcing, the popularity of which has been increasing in Slovenia and Croatia as well, has considerable implications in the field of labour law. Situations can vary significantly, 2 and so can legal protection of employees who previously performed this work with the employer who outsourced certain activities to an outside contractor. Legal status of employees in the case where the employer delegates his or her activity to an outside contractor is better protected, if conditions are met for a change of employer, which is regulated in the EU Member States with Directive 2001/23/EC (Grimshaw et al., 2015: 299; Mori, 2015: 152). The employment relationship with employees is transferred to the outside contractor (the transferee) and the employees retain their existing employment rights. 3 Otherwise, the scope of safeguarding of employees' rights in the case of the change of employer varies among individual countries, which is a result of different interpretations of the Directive and its implementation into national legal systems (Hartzen et al., 2008, Grimshaw et al., 2015: 305, 306). If conditions for the change of employer in the case of outsourcing are not met, the employer (contracting authority) may for business reasons terminate the employment relationship with those employees whose work is no longer needed due to outsourcing. Even if the contractor enters into employment relationship with any of these employees, he or she is not required to grant them the same rights that they had with their previous employer (contracting authority). 2 The application of Directive 2001/23/EC in the case of outsourcing Change in the organisation of an undertaking or transfer of an undertaking or part of an undertaking from one legal entity to another has significant implications for employees of that undertaking or part of the undertaking. Directive 77/187/EEC on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings,