Working Conditions - Transfer of Undertakings

Transfer of Undertakings

If a workplace is transferred from one employer to another, it is important to protect the employees’ rights. The EU has acted to ensure that this takes place.

The Directive regulating this issue (2001/23/EC) emphasises that the transfer of an undertaking does not in itself constitute valid grounds for dismissals. They may occur, however, for economic, technical or organisational reasons, or for certain categories of worker not covered by legislation protecting against dismissal. Rights and obligations under the employment contract or relationship pass from the previous employer to the new one. But a Member State may decide that both of them are to be liable for any such obligations which arose before the date of transfer. Collective agreements continue to apply until they expire or are terminated or replaced. But the period for observing them may be limited, provided it is not less than one year.

Continued observation of rights does not apply, unless Member States provide otherwise, to old-age, invalidity or survivors’ benefits under non-statutory, supplementary pension schemes.

Unless a Member State provides otherwise, the obligation to retain rights and the prohibition of dismissals do not apply to transfers during bankruptcy proceedings instituted with a view to the liquidation of the assets of the previous employer, but Member States must take steps to prevent the misuse of insolvency proceedings to deprive employees of their rights.

Employees' representatives remain in office if the economic entity preserves its autonomy after the transfer. In other cases, Member States must ensure that transferred employees continue to be properly represented until the new representation of employees is reconstituted or reappointed. Representatives must be consulted in good time on any measures envisaged in relation to employees as a result of the transfer. Moreover, representatives and, in certain cases, employees themselves must be informed about the date, reasons and implications of the transfer as well as the measures envisaged in relation to the employees.

The Directive (2001/23/EC) codifies a previous Directive (77/187/EEC) which was amended by a third (98/50/EC).