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Safeguarding employees' rights in the event of transfers of undertakings

The aim of this Directive is to protect employees in the event of a change of employer following a transfer of undertaking. It specifies the rights and obligations of employers affected by the transfer.

ACT

Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses.

SUMMARY

The transfer of an undertaking or an establishment * may be the result of a legal transfer or merger. Following a transfer, the transferee * of the undertaking becomes an employee of the undertaking transferred by the transferor *.

In these circumstances, the rights and duties of the employment contracts of the employees from the transferred undertaking will be recognised. This Directive applies to all types of employment relationships, without distinction in relation to:

  • the number of working hours, performed or to be performed;
  • the type of employment contract (undetermined, fixed-duration, or temporary).

The Directive applies to all undertakings, public or private, which are engaged in economic activities whether or not they are operating for gain.

Transfer of employment relationships

The rights and obligations of employees are maintained where an undertaking is the subject of a transfer. These rights and duties are connected with an existing employment contract or relationship.

In addition, the transfer of an undertaking is not grounds for dismissal. Dismissals may only take place for economic, technical or organisational reasons.

Member States may require that the transferor notifies the transferee of all the rights and obligations which will be transferred. However, they are still transferred even if this communication is not carried out.

In principle, the working conditions of the employees are maintained for the duration of the collective agreement of the undertaking. However, these conditions may be amended, at least one year after the transfer of the undertaking and if the Member States so authorise.

In addition, in principle, the rights and obligations of the employees, which exist under the complementary social protection schemes, are not transferred. However, Member States take measures to protect the rights to old-age benefits acquired under these schemes.

The rights and obligations of employees are not preserved where the transfer is undertaken as part of insolvency or bankruptcy proceedings. To prevent the misuse of insolvency proceedings in order to deprive employees of their rights in the case of a transfer, Member States may take appropriate measures in order to prevent this type of practice.

Employee information and consultation

During a transfer, employee representatives shall maintain their function until their reappointment is possible. Employees must continue to be represented, including in the case of bankruptcy or insolvency proceedings.

In addition, trade union representatives are consulted before measures concerning employees are adopted.

Employees are informed of the transfer conditions either directly or through the intermediary of their representatives. In particular, this information concerns the date or proposed date of the transfer, the reasons for the transfer, the legal, economic and social implications, and any measures envisaged in relation to the employees.

If an arbitration board exists in the Member State concerned the information and consultation requirements may be limited to cases where the transfer gives rise to disadvantages for a considerable number of the employees.

Lastly, the rights of trade union representatives are preserved even if their term of office expires as a result of the transfer of the undertaking.

Key terms of the act
  • Transfer of an undertaking: the transfer of an economic entity that retains its identity, defined as an organised grouping of resources that has the objective of pursuing an economic activity.
  • Transferee: any natural or legal person who becomes the employer in respect of the transferred undertaking.
  • Transferor: any natural or legal person who, by reason of a transfer ceases to be the employer in respect of the transferred undertaking.

REFERENCES

ActEntry into forceDeadline for transposition in the Member StatesOfficial Journal

Council Directive 2001/23/EC

11.4.2001

16.2.1979 

OJ L 82, 22.3.2001

 
Last updated: 23.05.2011
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