This is a guide to the employment implications of transfers of undertakings in 35 jurisdictions mainly across Europe, but also including countries in South and Central America, the Middle East and Asia. What constitutes a transfer varies from country to country, but it includes the sale of a business and, at least in some circumstances, the outsourcing of a function.
Outline of EU law on transfers of undertakings
Within Europe, there is core legislation on transfers of undertakings that applies in all member states. If the law applies, the employees assigned to the undertaking transfer from the transferor to the transferee. Rights and obligations arising under a contract of employment or an employment relationship transfer to the transferee (other than rights in relation to pensions). Although liability falls on the transferee, Member States have the option to make the transferor and transferee jointly liable for obligations arising before the transfer. The transferee must continue to observe collective agreements. As long as the undertaking transferred preserves its autonomy, employee representation arrangements continue to operate on the pre-transfer basis.
There are certain constraints on dismissal. The transfer must not itself constitute grounds for dismissal by the transferor or the transferee — though that does not prevent dismissals for economic, social or organisational reasons entailing changes in the workforce.
The transferor and transferee are required to inform employee representatives of certain facts about the transfer and if the transferor or transferee envisages measures affecting its employees, it is required to consult the employee representatives to try and reach an agreement.
Law in non-EU countries
In many non-EU countries, including, for example, Latin American countries, there is no specific employee transfer law, but the effect of a transfer may still be that the employees are protected under general law or practice. This the case, for example, in Brazil and Peru. In some countries, 'employer substitution’ is provided for by law and the employer must honour the existing terms and conditions of the employees. This is the case in Mexico and Panama.
In Russia, the main circumstances in which employees would transfer tend to be through the privatisation of public bodies — and in such cases, employee rights are protected. In South Korea, case law provides the basis for protection.
Some countries that are outside the EU match its standards by adopting similar rules — as in, for example, Switzerland and Turkey.
Protection in the United Arab Emirates is less well-developed, as employees’contracts would terminate — and their immigration status would be lost (in the case of foreign workers) if a business transferred to another employer. Whether they would be offered new contracts would then be at the discretion of the employer.
- North America: Mexico
- Central & South America: Argentina - Brazil - Panama - Peru - Venezuela
- Western Europe: Austria - Belgium - Cyprus - Denmark - Finland - France - Germany - Greece - Italy - Luxembourg - Netherlands - Norway - Portugal - Spain - Sweden - Switzerland - United Kingdom
- Eastern Europe: Czech Republic - Hungary - Latvia - Lithuania - Poland - Romania - Russia - Slovakia - Turkey - Ukraine
- Middle East & Asia Pacific: South Korea - United Arab Emirates