Consequences of the business takeover for the employment relationship

• Employment Law
• SME

From the point of view of labour law, the main consequence of a business takeover is the automatic transfer of employment relationships. These are transferred to the acquirer with all rights and obligations on the day of the business succession. The transfer of the employment relationship has numerous consequences for all parties involved. In order to avoid potential disputes in advance, the mandatory labour law provisions for the transferee, the employer and the employee should be observed.

Consequences for the transferee

The new employer is subject to a takeover obligation. He may only terminate the employment relationship after the takeover and under the previously applicable conditions. The existing notice periods must be observed. The new employer must grant the employee the same working conditions as before the takeover. This includes all individual agreements. First and foremost, the general working conditions such as wages, working hours, etc. must be considered. However, claims such as overtime and rights to refuse performance are also transferred. However, the automatic transfer of all rights and obligations does not mean that contractual adjustments are not possible. However, the existing periods of notice and any further restrictions must be observed or the employee’s consent must be obtained. If a collective employment agreement (CLA) is applicable to the employment relationship to be transferred, it must be complied with for one year.

Consequences for the old employer

The former employer must inform the employees or the employee representatives of the transfer of the business in good time before the transfer is completed. At the very least, the reason for the transfer of the business and the legal, economic and social consequences must be communicated. If measures affecting employees are intended in connection with the transfer of the business, there is not only a mere duty to inform but also an actual duty of consultation. The latter is intended to serve the goal of reaching an agreement between employer and employees in a dialogue.

It is unclear whether ordinary dismissals are permissible with regard to a transfer of business. If a notice of termination is given solely in order to prevent the transfer of the employment relationship, the law has been circumvented and the notice of termination is null and void. In addition, the old employer is jointly and severally liable with the transferee for the employee’s claims arising from the employment relationship which became due before the transfer.

Consequences for the employee

The transfer of all rights and obligations arising from the employment relationship also means that the employee concerned retains all rights which are linked to the number of years of service.
The employee has a right of refusal regarding the transfer of the employment relationship. The period within which this right of refusal must be exercised must be determined in each individual case. The employment relationship is transferred to the new employer despite a declaration of rejection until the end of the statutory period of notice. During the period of notice, the contractual obligations must be fulfilled by both parties. Any prohibitions of competition, on the other hand, lapse with the rejection.

Based on our experience with company takeovers, we will advise and assist you in all questions and problems arising in connection with employment and property law.