Transfer of business
‘Transfer of business’ means that a business or part thereof is transferred to another owner/operator. The rules concerning the transfer of business only apply in the event of the sale of business, hire/rental, transfer as part of an inheritance settlement or transition to a new operator in connection with outsourcing. The transfer of business is regulated in the Working Environment Act. The purpose of the regulations is to ensure that employees’ terms and conditions do not alter as a result of the transfer.
The transfer of business is regulated in the Working Environment Act. The purpose of the regulations is to ensure that employees' terms and conditions do not alter as a result of the transfer.
Transfer of business and employee rights
In the event of the transfer of business, the new owner/operator will normally take over all existing employees with their agreed conditions. Retirement pensions, survivor's pensions and disability pensions will also be transferred to the new employer. If the new employer already has a pension scheme, the employer may opt to use this. In reality, the employees therefore risk ending up with a scheme which is inferior to the one they had with their previous employer.
Transfer of business and collective agreements
If a business is bound by one or more collective agreements which the new owner does not wish to be bound by, it must notify the unions in writing within three weeks after the transfer.
Discussion concerning the transfer of business
Both the previous and the new owner/employer are obliged to provide information on and discuss the transfer with the employees' elected representatives as soon as possible. If the previous or new employer is planning to implement measures which will affect the employees, the matter must be discussed with the elected representatives as soon as possible with a view to reaching agreement.
Provision of information to employees
The employees concerned must be given information on the transfer of the business as soon as possible. Specific information must be given concerning the reason for the transfer, the fixed or proposed date for the transfer, the legal, financial and social consequences of the transfer for the employees, changes in collective agreement circumstances, planned measures relating to the employees, right to opt out, right of pre-emption and the deadlines that apply.
Opting out of switching to the new employer
Employees can opt out of the transfer to the new employer. If they do so, their employment will cease as of the transfer date. If a transfer to a new employer entails significant changes or disadvantages for an employee, the employee may be entitled to continue working for his or her old employer. It is the employer's responsibility to determine whether any employees do not wish to transfer to the new employer. Employees normally have 14 days to notify their old employer in writing if they do not wish to transfer to the new employer.
Pre-emption right with previous employer
Employees who have opted out of being transferred to the new employer and who have been employed for at least 12 months during the past two years have a pre-emptive right as regards employment with the previous employer for a period of one year after the transfer of the business. It is a condition that the employee is suitably qualified for any positions.
Transfer of business and redundancies
In the event of the transfer of business, the employees are covered by certain protection against redundancy. The transfer of the business itself cannot be used as a reason for making employees redundant. However, employers are not prevented from making employees redundant, but the redundancies must be carried out in accordance with the ordinary redundancy rules. Among other things, this means that all employees must be considered when deciding who is to be made redundant, not just the employees who were transferred to the new owner in connection with the transfer of business.
Transfer of business from bankruptcy estates
In the case of transfer from a bankruptcy estate, neither the rules concerning the transfer of salary and employment conditions nor the protection against redundancy will apply.