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Specific Employee Protections

Protection Against Dismissal.

  • EU Directive.  The corporate transaction cannot, in itself, constitute grounds for dismissal by either the transferor or the transferee.  However, dismissals for economic, technical or organizational reasons entailing changes in the workforce are not prohibited by the Directive.  Whether those reasons exist in any particular transaction depends on the facts and circumstances.
  • Belgium.  The corporate transaction cannot, in itself, constitute grounds for dismissal by either the transferor or the transferee.  However, dismissals for economic, technical or organizational reasons entailing changes in the workforce are allowed by CBA 32bis.  Whether those reasons exist in any particular transaction depends on the facts and circumstances.  Dismissals which breach such prohibition are not null and void and remain effective but are subject to (i) administrative sanctions (administrative fine) and (ii) award of additional damages to the employees.
  • France.  The corporate transaction cannot, in itself, constitute grounds for dismissal by either the transferor or the transferee of the employees who are part of the transferred undertaking.  Dismissals for economic reasons by the transferor prior to a transfer are deemed by French case-law to be related to such transfer and are voidable. The dismissed employee is entitled to either get damages from the transferor or be reinstated in its former job position with the transferee.
  • Germany.  The corporate transaction cannot, in itself, constitute grounds for dismissal by either the transferor or the transferee.  The termination of the employment relationship of an employee by the transferor or by the transferee due to the transfer of a business or a part of a business is invalid.  However, dismissals for economic, technical or organizational reasons entailing changes in the workforce are not prohibited by Section 613a of the German Civil Code.  The same applies to other permitted reasons for termination under German labor law.  Whether those reasons exist in any particular transaction depends on the facts and circumstances.
  • Italy.  The transfer of going concern cannot, in itself, constitute grounds for dismissal by either the transferor or the transferee.  The termination of the employment relationship of an employee by the transferor or by the transferee due to the transfer of a business or a part of a business is invalid.  However, dismissals (whether individual or collective) are not prohibited by Article 2112 of the Italian Civil Code. If redundancies are necessary (e.g., because the transferee is going to carry out a restructuring of the business) the transferee must state this information in the notification to the applicable trade unions and works councils (see “Obligation to Provide Information”).
  • UK.  The dismissal of an employee (by the transferor or the transferee), where the sole or principal reason for the dismissal is the transfer, will be automatically unfair under English law. This rule does not apply where the employer can show that the dismissal was carried out for an economic, technical or organizational reason entailing changes in the workforce. This will depend on the facts of each case.

Substantial Changes in Working Conditions

  • EU Directive.  If the transfer involves a substantial change in working conditions to the detriment of an employee and the employee resigns in response, the employer is nonetheless regarded as having been responsible for the termination and the employee may under national law be entitled to severance benefits.
  • Belgium.  If the transfer involves a substantial change in working conditions to the detriment of an employee and the employee resigns in response, the employer is nonetheless regarded as having been responsible for the termination (constructive dismissal) and the employee may be entitled to severance benefits.
  • France.  The rule pursuant to which the employer remains responsible for the termination of employment in case the transfer involves a substantial change in working conditions to the detriment of an employee and the employment is terminated has not specifically been implemented under French law. However, general rules of French law tend to the same purpose since a refusal by an employee of a change in its working conditions does not allow the employer to consider that the employee has resigned but rather requires the employer to initiate a dismissal procedure.
  • Germany.  German law does not provide for an obligation to pay severance, even if the working conditions are subject to substantial changes to the detriment of the employee.  Instead, the employee has a right to object to the transfer (see “Right to Object to the Transfer” below).  Once the employee is transferred, there is no entitlement to severance benefits in case of a resignation.  However, in case the transfer of undertaking involves a change in the business operation (Betriebsänderung) (e.g., a relocation or separation of the business operation), the works council may be entitled to demand negotiations on a reconciliation of interests and a social plan, under which the transferring employees may be entitled to compensation for any financial disadvantages of such change in business operation.
  • Italy.  As a general principle, employees continue to be employed by the transferee on the same terms and conditions on which they were employed by the transferor. The transferee cannot unilaterally change the terms of any existing employment agreement.  Any reduction in employees’ rights must either be negotiated with works council in the context of the consultation procedure (see “Obligation to Consult”) or be subject of individual waivers signed before the labor authorities.
  • UK.  Changes made to the contractual terms of employees’ employment will generally be void and unenforceable by an employer1 if (i) the transfer is the sole or principal reason for the change, and (ii) the employer cannot show that the change was made as a result of an economic, technical or organizational reason entailing changes in the workforce. This rule is relaxed where the transfer is taking place in the context of the transferor’s insolvency.  If the transfer involves a substantial change in working conditions to the detriment of an employee and the employee resigns in response prior to the transfer, the employee will be treated as having been dismissed and may be entitled to remedies for unfair dismissal.

Right to Object to the Transfer

  • EU Directive.  It is for the EU Member States to determine the implication of an employee deciding not to continue to work for the transferee.
  • Belgium.  In the absence of a substantial changes in working conditions (see “Substantial Changes in Working Conditions” above), an employee who decides not to continue to work for the transferee is deemed to have resigned.  An employee cannot be forced to transfer.
  • France.  French rules on the transfer of undertaking do not permit to the employees to object to the transfer of their employment agreement. The transfer is an obligation for the transferor, the transferee as well as for the employee.
  • Germany.  The employee may object in writing to the transfer within a period of one month after having received an employee information letter, including, inter alia, correct and complete information on the legal, economic and social consequences of the transfer for the employees (see “Obligation to Provide Information”).  The one-month objection period only commences upon receipt of correct and complete employee information letter; an incorrect or incomplete employee information letter results in an unlimited objection right of the employees that is only subject to general forfeiture rules.  In case an employee exercises the right to object, he or she does not transfer to the transferee and will remain with the transferor, risking that the employment relationship will be terminated by the transferor based on redundancy.
  • Italy.  If their working conditions change materially during the three-month period following the transfer of the business concern, the transferred employees would be entitled to resign for cause.
  • UK.  Under TUPE, an employee is entitled to object to the transfer of their employment. Their employment will then be treated as terminating at the time of the transfer. The employee will have no remedy in connection with the termination of their employment and will effectively be treated as having resigned.

Contracting Out

  • EU Directive.  Any purported waiver by an employee of rights under the Directive is deemed to be invalid as a matter of public policy.
  • Belgium.  Any purported waiver by an employee of rights under the Directive or CBA 32bis is deemed to be invalid as a matter of public policy.  Such waiver cannot be validly negotiated by the union organizations and laid down in a CBA concluded at the time of the transfer: such CBA is deemed to be invalid.  However, case law and legal doctrine consider that an employee can validly refuse to be transferred and remain with his current employer but only if the latter accepts.
  • France.  Any purported waiver by an employee of rights under the Directive is deemed to be invalid as a matter of public policy.
  • Germany.  In general, a purported waiver by an employee of rights under Section 613a of the German Civil Code is deemed to be invalid.
  • Italy.  Any provision with the purpose to exclude or limit the application of the law is void.
  • UK.  Parties cannot contract out of the application of TUPE.

[1] Note that where changes have been made in breach of TUPE, an employee may “cherry-pick” by enforcing a newly introduced term that is otherwise void under TUPE, while still relying on the terms that applied prior to the amendment where it suits the employee to do so.