When it comes to sales, mergers, or demergers, there are legal regulations around the transfer of a company. These regulations are designed to protect employee rights as the business transitions.
The guiding principle is that if the business is transitioned, the employees employed by the business at the time of the transition are automatically transferred to the acquiring undertaking, along with their existing employment conditions. In general, there are no exceptions, which means employees can't agree to inferior employment conditions.
Three basic requirements must be met when a business is being transitioned:
- The business must exist.
- The business must pass from the transferor to the transferee. The decisive factor is whether the identity of the business is preserved.
- The business must be transferred by agreement, merger, or demerger.
In many cases, it’s not easy to determine whether there’s (or may be) a business transition. Even if it's clear that there is, exceptions or special rules may apply to things like pensions and the applicability of collective labour agreements. We can advise on issues like whether the business is actually transitioning and offer practical guidance to employers throughout the processes.