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Czech Republic Denmark France Germany Hungary Ireland Italy Netherlands Poland Spain Sweden Switzerland UK

Transfer of business

Sec. 3 ff. Employment LawHarmonisation Act, 77/187/EWG,RL 98/50/EG.

Transfert d’entreprise –overdracht van onderneming.

Sec. 338-340 Labour Code. Transfer of Undertakings(Employees legal position) Actno. 441 of 7 June 2001[virksomhedsoverdragelse].

‘Transfert d’entreprise’ (ArticleL.1224-1 of the new FrenchLabour Code).

§613a BGB (Betriebsübergang). §613a BGB (Betriebsübergang). MUNKALTATÓI JOGUTÓDLÁS.

Transfer of Undertakings. The UKacronym ‘TUPE’ is also used.

TRASFERIMENTO D’AZIENDA. Book 7, part 10, chapter 8, Transfer of Undertaking (“Overgang van Onderneming”)

PRZEJSCIE ZAKLADU PRACY. SUCESIÓN DE EMPRESA. Övergång av verksamhet. “Betriebsübergang” - Art. 333 and 333a Swiss Code of Obligations (CO).

Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”).

Definition: a transfer of assets

(employees, business, etc)

from a company to another.

The object of the transfer is

the company or the business,

not the shares or stocks

Definition: a transfer of acompany, undertaking or part ofa business from one employer toanother proprietor. In every caseof transfer of a business or part ofa business, the employmentrelationships are automaticallytransferred to the new employer.All individual rights andobligations are maintained.

A transfer of a social or economic entity that retains its identity.

A transfer of an economic entity that retains its identity as an organised group of resources and has the purpose of carrying out economic activity.

A transfer of a company or a part thereof. The acquirer assumes the rights and obligations pursuant to the contracts of employment that existed at the time of transfer

Definition: a transfer of anautonomous economic entitythat retains its identity and whoseactivity is either continued ortaken up.

A transfer of an economic entity that retains its identity.

Definition: when an independentunit (such as a strategic businessunit, plant, shop, division,workplace, or any section of these)or the material and non-materialassets of the employer aretransferred by agreement to anorganisation or person fallingwithin the scope of the LabourCode for further operation or forrestarting operations if suchtransfer takes place within theframework of sale, exchange, lease,leasehold or capital contribution fora business association.

A transfer of an economicentity that retains its identity.

A transfer of assets (employees, business etc) from one company to another where the object of the transfer is the company or the business not the shares of stocks. The discrete economic entity must retain its identity following the transfer.

A transfer of a company or a part thereof. The acquirer assumes the rights and obligations pursuant to the contracts of employment that existed at the time of transfer.

Definition: a transfer of anemploying establishment ora part of it (including transferof assets and/or activitiescomposing a business unit inwhich employees are employed)to another employer that results in the latter becoming a party tothe existing employmentrelationships by virtue of law.

Definition: a transfer of aneconomic entity which maintainsits identity, and is understood asa group of organised means/resources that carry out aneconomic activity either essentialor incidental.

In conjunction with the transferof an undertaking, a business orpart of a business from oneemployer to another, the rightsand obligations pursuant tocontracts of employment and theemployment relationships thatexisted at the time of the transfershall, with a few exceptions,also be transferred to the newemployer.

Definition: If the employer transfers the enterprise or a part thereof to a third party, the employment relationship is transferred to the acquiring party including all rights and obligations as of the date of transfer, unless the employee declines the transfer.

A transfer of a business,undertaking or part thereofwhere there is a transfer of aneconomic entity that retainsits identity, or, a companyengaging a contractor to dowork on its behalf, reassigningsuch a contract or bringing thework ‘in-house’. However thesupply of goods and one-offbuying-in of services areexcluded.

Minimum number of employeesrequired in

company. If so how many?

No. No. No. No. No. No. No. No. Yes, if the transfer involves morethan 15 employees.

No. No. No. No. No. No.

Mandatory information and

consultation requirements?

Works council according to Sect.108 para. 2a Labour Relations Actand employees according toSect 3a Employment LawHarmonisation Act if thereis no works council.

I/C at the level of the works council, or if none, at the level of the union delegation, or if none, at the level of the Committee for Prevention and Protection at work.

Yes. Employee representatives(trade union or works council).If none, directly with all affectedemployees.

Yes. With employeerepresentatives, if none directlywith employees.

Yes, I/C with the works council ofthe transferor and transferee.

I/C only if there is a works counciland the transfer constitutes a‘change in establishment’; inall cases (irrespective of workscouncil) written information tobe provided to each affectedemployee.

Yes. Yes. Yes, if the transfer involves morethan 15 employees.

Yes, with works council or the employees representative board. If none, directly with employees.

I/C in parallel with the workscouncil and either trade unionorganisations at theestablishment level or individualemployees, when there areno trade unions at theestablishment level.

Yes, with employeesrepresentatives. If none, theemployees should appointrepresentatives for the I/Cprocess.

Yes. Yes. The employees’ representative body or, if there is none, the employees directly.

Yes.

Timeframe I/C?

Prior to the transfer. Before the transfer is made publicand executed, usually before the‘closing’ of the deal.

No specific timing, usually atleast 30 days before the transfer.

As early as possible, so theemployees have time to evaluatehow the transfer will affect them.In any event before the transferis executed.

No specific timing but I/C beforeany decision is made.

As early as possible, in any eventbefore the transfer is made publicand executed; written informationto employees ideally at least onemonth before transfer.

15 days before legal succession,inform employee representatives(WC, union, other committees).

‘In good time’, but not less than30 days prior to the closing date,unless this is ‘not reasonablypracticable’.

Yes. Within ‘reasonable time’ for theworks council/staff association togive advice, before the actualdecision has been made.

At least 30 days in advance to theintended transfer I/C with tradeunion or individual employeesand no precise time scale forparallel I/C of the work council.

Yes, information should be servedwith sufficient notice, beforethe execution of the transfer.Consultation must be done insufficient time, before measuresare effective.

Before the decision is made regarding the transfer.

In due time prior to the transfer. No specific timeframe but musttake place long enough beforethe transfer to enableconsultations to take place.

Is local I/C required in the

event of a transfer at groupor holding level

outside yourcountry?

No, unless the transfer can beconsidered as an ‘event thatmight have importantconsequences for the company’.

No, unless the transfer can beconsidered as an ‘event thatmight have importantconsequences for the company’.In that case the works councilneeds to be informed (notconsulted).

No, unless such transfer has animpact on the employees in theCzech Republic.

Yes. Yes, if there is impact onemployees in France.

No, unless there is an economiccommittee (in companies withmore than 100 employees) andthe transfer can be considered asan ‘event or plan which couldmaterially affect the employees’interests’ in which caseinformation only.

Yes, if there is impact onemployees or the employer’seconomic situation.

If the company that employs theemployees changes, consultationwill be required.

Yes. Yes, if holding and legal entity inthe NLs can be identified, jointlyundertake or decision of theholding company can beattributed to the entity in the NLs.

No, unless the transfer impactsessential changes in theorganisation of work or legalgrounds for employment.

No, only if this will imply theapplication of labour measures tothe employees in Spain.

No, unless such transfer concernsa Swedish company.

No, unless there is an impact on employees in Switzerland.

No.

Information to third parties.If so, which

(external unions,government,

etc)?

No. No. No. No. No, unless transfer of part ofa business and protectedemployees are transferred(eg works council members,personnel delegates): their transferhas to be authorised by the LabourInspector (their dismissal as well).

No. No. Not under TUPE regulations.May be required under otherlegislation if redundancies aremade.

Yes, if the transfer involves morethan 15 employees. Internal andexternal unions.

Yes, trade union and SocialEconomic Council.

No. Yes, if the transfer implies acollective modification of the jobconditions or geographicalmobility.

No. Only information/consultation if a CBA applies orthere are affected trade unions.

No, unless the transfer involves a collective redundancy (then notification of the Labour Office required).

Yes, statutory obligation to provide employee liability information to transferee at the latest 14 days prior to transfer.

Do the employees or

representatives need to agree

with the transfer?

No. No, except as far as the protected employees who have been candidates to the social elections for the set up of the works council and/or the committee for prevention and protection at work are concerned.

No. No. No agreement required fromeither of them. The works councilneeds to give an opinion on theproject.

No. No. No. No. No. No. No. No. No. No.

Can the employees

object? If so,what is the

consequence

Employees may object to their transfer if the new employer refuses to accept special protection from a Collective Bargaining Agreement and the employee therefore loses special protection against termination, or if the new employer refuses to accept individual pension entitlements.If the transfer causes a change in the applicable Collective Bargaining Agreement or plant agreement and this causes significant deterioration of the working conditions, the employees are entitled to terminate employment with the new employer with the same consequences as if the employer had terminated the employment relationship.

The employee has the right toobject. Doing so is seen as atermination by the employee.

No, but the employee canterminate with two months’notice.

No, unless the ground forobjection is breach ofexpectations.

No, the transfer of theemployment contracts is byoperation of law. If the employeesrefuse to work for the transferee,that could justify a dismissal bythe transferee for grossmisconduct.

The employees can object and ifthey do, they remain employeesof the transferor.

No. In line with recent case law, an employee who refuses to transfer is generally considered to have resigned.

Yes, the employee can object.In this case, the employee has toresign with notice.

No. If employees object theiremployment ends by operationof law.

A transferred employee canobject and terminate theemployment contract uponseven days prior notification(termination has the same effectas with notice by the employer).

If measures are proposed whichcan be considered substantialmodification of duties or labourmobility the employee can objectand terminate his employmentcontract with a right tocompensation.

The employee has the right toobject. In doing so the employee will face the risk of receiving notice of termination due to redundancy.

Yes, in such case the employment relationship is considered to be terminated upon the expiry of the statutory notice period, at the earliest at the time of the transfer of business.

Yes, employment ends ontransfer date.

Can the new employer change

the terms and conditions of the

employment contract? If so,

in what time frame?

Yes, as far as individual pensionentitlements and specialprotection against terminationin a Collective BargainingAgreement are concerned if theseller of the business continuesto exist; in all other casesdeteriorations may be agreed byindividual contract within the firstyear after the transfer.

No. No, except with employeeconsent.

No, except with employeeconsent. If substantial changesare notified and the employeesdo not want to continue theiremployment relationships on thechanged conditions as offered,the employees are entitled toconsider the notification as adismissal by the employer andcease their work at the end of theperiod of notice.

An agreed change is possible (ifchange is substantial) unless thechange is because of the transfer.Minimum one month.

Not if the change is because ofthe transfer; agreed changepossible but in some cases(originally collective terms) notwithin the first year following thetransfer if to the employees’detriment.

No. No, except by individual employee’s consent.

No. No, except where change is for areason other than the transfer inwhich case it is possible to agreeon change and, under certaincircumstances, changeunilaterally. No mandatorytime frame.

The new employer may notterminate employment becauseof the transfer. For one year afterthe transfer, the new employer isobliged to apply the provisions ofthe collective labour agreementwhich is binding on the previousemployer at the date of thetransfer. After the elapse of thisperiod and at any time when nocollective agreement is in place,the new employer can changethe conditions of theemployment for a good reason,with observance of the noticeperiod.

Yes, with limitations andconsultation required in any case.

No. No. Only by termination of the employment contract and simultaneous offer of a revised contract can the pre-existing terms and conditions can be changed. A revised contract can be agreed upon termination of the earlier contract, for example, by compromise agreement with immediate effect or upon exhaustion of the ordinary notice period.

Only in very limited situations.No time frame.

Reasons for which the

termination of the employmentcan be justified?

The contract may be terminatedfor gross misconduct, foreconomic or organisationalreasons.

The contract can be terminatedfor gross misconduct, foreconomic or organisationalreasons.

Only for general statutory reasonsnot connected with the transfer.

Gross misconduct or economic,technical or organisational reasonentailing changes in the workforce. The employer bears theburden of proof.

For the transferor, no possibleredundancies prior to thetransfer. Whether for thetransferor or the transferee, areason unrelated to the transfer,as long as it is based on genuineand serious grounds.

The contract can be terminatedfor gross misconduct or for oneof the fair reasons under theProtection Against Dismissal Act(reason in the person, conductor business) but not because ofthe transfer.

The transfer itself cannot be the reason for termination. The employer may only terminate the employment contract for the normal reasons in connection with performance etc.

Economic, technical or organisational reasons, and any reasons which were available to theprevious employer.

The contract can be terminatedfor gross misconduct, justifiedgrounds regarding the employer(economic, technical ororganisational reasons).

Economic, technical ororganisational reasons notdirectly connected to the transfer.

Employment contract can beterminated without notice forgross misconduct or in case ofextensive absence, or with noticefor other length of time and true and justified reasons except transfer of establishment.

Gross misconduct, andobjective causes (economical,organisational, productive ortechnical) which will help toposition the company in a morecompetitive place in the market.

The contract can be terminated for gross misconduct, for circumstances related to the employee personally and for economic and organisational reasons.

General provisions for termination apply (for an ordinary termination there are no reasons necessary).

Economic, technical or organisational reasons entailing changes in the workforce.

If the procedure is not followed

can the transfer be preventedor delayed?

No. No. No. No. Yes if the works council refuses togive an opinion on the transfer:this could postpone theimplementation of the project.

Prevented: no. Delayed: somecourt districts might grantinjunctions to delay if seriousbreach of works council rights,but unlikely.

No. Theoretically prevented ordelayed.

Yes. Yes, it can both be prevented anddelayed if works council givesnegative advice and startslitigation.

No. Yes. No, however a delay may occuras a consequence of negotiationswith the unions.

Yes, registration in the Commercial Register may be denied by court injunction in cases of merger/demerger/transfer of assets and liabilities according to the Swiss Merger Law.In other cases it is uncertain whether court injunctions would be available.

No.

If the procedure is not followed

can the company be punished

with damages?

A termination of contract due tothe transfer is null and void,however, employees maydemand a declaratory judgementor alternatively accept thetermination and demand allpayments they are entitled to dueto the unjustified termination.

Employees can claim damages forabusive dismissal related totransfer.

Employee can appeal againstunfair dismissal and claim fullsalary compensation andcontinuing employment.

Yes. Yes. Failure to I/C the works councilwhere an obligation exists canlead to employees being ableto claim damages andcompensation; failure to givewritten information to employeesmay lead to damages claims.

Employees can challenge the transfer and the Labour Supervisor can impose a fine but damages are not available.

Yes, limited damages under the regulations are available for failure to inform and consult.

No. No. Employee can appeal againstunfair dismissal.

Yes, economic sanction up to€3,000.

Yes, in relation to the affectedunions.

The employees can claim compensation for damages if they are able to prove damage and causality.Failure to follow procedure does not justify indemnity for unfair dismissal

Yes, protective awards for failing to inform and consult up to 13 weeks’ pay per affected employee.

Other sanctions?

Criminal sanctions. Fine for failure to inform andconsult.

Yes, the company may be fined. Failure to inform and consult withthe works council is a criminaloffence. For the head of thecompany: fine up to €3,750and/or a prison sentence of upto one year for a first offence(€7,500 and/or two years’ prisonsentence in case of a repeatedoffence). For the company: fineup to €18,750.

No. Yes, breach of I/C obligation: fineof up to HUF 100,000.

A TUPE situation could give riseto other legislative sanctions, orHR difficulties.

Failure to inform and consult theTU if the transfer involves morethan 15 employees is deemed asanti-union behaviour.

No. Petit offence or criminal sanctions(fine).

Compensation of damages tothe employees, which should beproved by the specific employee.

No. No. Protective award.

TUPE across Europe The information you need for each country

www.eversheds.comThis information is intended as a guide only. Whilst the information it contains is believed to be correct, it is not a substitute for appropriate legal advice. Eversheds

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