In the economical practice, entrepreneurs have to deal with different kinds of organisational changes, such as transfers of assets, transfers of enterprises, mergers or split-ups etc. which also affect their employees. Labour law codifies the institute of automatic transfer (succession) of rights and obligations arising under employment to protect employees in these cases.
The Labour Code as well as European Union law provides for the protection of employees against termination of their employment not only in cases when the employer who ceases to exist has a legal successor, but also in case of transferring the employer’s business, i.e. an enterprise or part of it or even any of its business activities irrespective of the legal grounds or form of the transfer (for example a transfer of certain assets, certain outsourcing of activities or a lease of an enterprise).
Whilst in the first case all employee’s rights and obligations under employment relationships are automatically transferred to the legal successor as a whole, in case of transferring a business or a part of it, the transfer concerns only the employees whose activities have been affected by the transfer of a business. In those cases, employees are transferred automatically by law and the transfer does not affect continuity of existing employment relationships or employees’ rights. That means that employment contracts of employees affected by the automatic transfer do not have to be terminated by the transferor and no new contracts have to be concluded with the transferee. Consequently, the automatic transfer protects employees from their employment being terminated due to the transfer.
The concerned employees may, however, be dismissed on other grounds under the Labour Code.
However, it is not always possible to ensure that the working conditions (for example working place, wages or job description) stated in the existing employment contracts of the transferred
employees will be preserved after the transfer. In this case, new conditions must be agreed
by the employees in the form of an addendum to the existing contracts. Evidently, some of the employees might disagree with the working conditions offered by the new employer. In this case the employment relationship may only be terminated by notice for the reason of redundancy, the notice period must be observed and the employee is entitled to severance payment. Of course, the parties might also conclude an agreement on termination of employment on the same grounds (again the employee is entitled to severance payment).
Under the Labour Code both parties engaged in the transfer, the former employer (transferor) and the new employer (transferee) must inform the concerned employees of the automatic transfer. Both of them are obliged to inform the employees’ representatives (or employees directly if no such representative exists) in writing at least one month before the planned transfer of rights and obligations. If, in connection with the transfer, the transferor and the transferee envisage any measures concerning employees, they are obliged to discuss them with the employees’ representatives (if any) with the intent to reach an agreement at least one month before the measures are to be carried out.
Moreover, the new employer is bound by the transferred rights and obligations under
employment relationships, including any relevant collective agreements. The same applies to the elected employees’ representatives. The transferee has to respect their position until the term of their office expires, unless they agree otherwise.
PETERKA & PARTNERS Law Offices
This article is of an informative nature only and under no account can it be considered to
be a legal opinion. Should you need any further information on the issues addressed in this article, please contact our Law Office:
PETERKA & PARTNERS,
Tel. +421 (02) 544 18 700,
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7. Mar 2011 at 0:00