Guide to employment law at a business sale

2 april 2015
 

Employee rights when businesses are sold/transferred in Europe stem largely from the EU Acquired Rights Directive (Directive 2001/23). So it is no surprise that there are similarities and common themes across European jurisdictions, namely;

• The automatic transfer principle (automatic transfer of employees from the old to the new owner, along with their contractual terms);
• Protection against dismissal by reason of a transfer;
• Employer obligations for employees (or their representatives) to be informed (almost all countries) and consulted (most countries) in relation to the transfer.

 

However, there are still many differences across European jurisdictions, including;
• Variation in the definition of a transfer of a business/service to bring it within the scope of the acquired rights regime (in many countries this will go beyond just a straight forward business sale).
• The consequences of a refusal by employees to be transferred;
• Sanctions imposed for failure to inform and consult and for dismissing by reason of a transfer;

• Rules in relation to small/micro employers.

 

In the Middle East and Africa the law is different again. The purpose of this guide is to give HR managers, in-house legal counsel and commercial managers an overview of employee rights and employer obligations when businesses are transferred, so they can better negotiate and implement cross-border transactions, but also more effectively manage staff transferring in and out of different jurisdictions.

 

The guide answers four key questions:
1. Do employees automatically transfer to the buyer when a business is sold?
2. Are there information and consultation (or other) obligations?
3. Can a buyer change employees’ terms and conditions after a sale?
4. What are the sanctions against non-compliant employers?