5 Business Sales
5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer?
It depends on the nature of the transaction. Some transactions demand a special agreement on the transfer of employees (i.e. the transfer of a business without universal legal succession) and in
some cases the transfer of employees is automatic (i.e. the sale of the whole or part of the business). In case of a share sale (i.e. acquisition), the employees do not transfer to the other employer – the change of the ownership of the employer does not affect the employees.
5.2 What employee rights transfer on a business sale? How does a business sale affect collective agreements?
All rights (and obligations), i.e. those from an employment contract and those from a collective agreement that bound the transferor, are included in a transfer. The rights arising from this collective agreement shall be assured by the transferee for at least one year, unless the collective agreement terminates prior to the expiration of one year or unless, prior to the expiration of one year, a new collective agreement is concluded.
5.3 Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult?
The law demands that at least 30 days prior to the closing date of transaction, trade unions or, in their absence, individual employees, are informed of the date or the suggested date of the transfer, the reasons for the transfer, the legal, economic and social implications of the transfer for workers, and the measures envisaged in relation to employees. The consultations with the trade union must be held at least 15 days prior to the transfer. The same deadlines must be obeyed regarding informing and consultations with the works council. Sanctions for failing to inform or consult are pecuniary, in case the Labour Inspector claims the employer’s liability.
5.4 Can employees be dismissed in connection with a business sale?
A business sale cannot be a direct reason or a reason per se for the termination of employment contracts. Further reorganisation of the new employer can result in terminations.
5.5 Are employers free to change terms and conditions of employment in connection with a business sale?
See question 5.2. Individual rights and obligations shall in no way be affected by the business sale. Should the employer unilaterally change the terms and conditions of the employment in any way for the objective reasons (i.e. to unify the rights and obligations of new and existing employees) in a manner that is less favourable for the employees and the employee terminates the employment contract, the employee shall have the same rights as if the employment contract was terminated by the employer for business reasons. W hen stipulating the period of notice and the right to severance pay, uie employee’s period of service with both employers shall be taken WU> account.
SOURCE: Employment & Labour Law 2012, ICLG
Authors: Miha Mušič, Vladka Plohl