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Transfer of business

Transfer of a business means the transfer of an undertaking, business, community or foundation or a functional part thereof to another employer, provided that the business or part of the business transferred remains similar after the transfer. In this context, the employees are transferred to the new employer as so-called "old employees" under the same conditions of employment as before.
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What does the transfer of a business mean?

A transfer of a business is the transfer of an operational unit to a new employer. The employer must therefore change. The reorganisation of the same company and the transfer of tasks from one unit to another within the same organisation do not qualify as a transfer of a business.

The purpose of a transfer of a business is to continue the business to be transferred and this is often done by agreement between the transferor and the transferee. A mere sale of shares or merger does not fulfil the characteristics of a transfer of a business. The business to be transferred must remain the same or similar in order to constitute a transfer of a business. However, the business need not remain exactly the same by the transferee.

The business must continue uninterrupted, but this does not mean that there cannot be a short interruption in between, for example, due to the renovation of premises or the replacement of machinery and equipment. The decisive factor is whether the interruption can be considered temporary.

The identity of the business must also be preserved, i.e. the object of the transfer must be the business, which must form a functional whole. The sale of a piece of machinery or equipment or the transfer of the work of an individual employee to another undertaking cannot therefore be regarded as a transfer of a business if similar tasks continue to be performed by other employees in the undertaking. However, the transfer of a business is always a matter of overall assessment, taking into account the above-mentioned elements.

When you transfer your business, you will be transferred to your new employer as an "old employee" on the same terms and conditions as before. This means that the rights and obligations of your employment relationship remain unchanged. The new employer cannot unilaterally change the terms and conditions of your employment.

Often, when a business is transferred, the transferee offers new employment contracts for employees to sign. However, you should be particularly careful in these situations, as in many cases the new employment contract offered may contain some weakening of the previous terms and conditions of employment. It is worth bearing in mind that you are not obliged to sign a new employment contract with your new employer; the employment contract with your previous employer is binding on the new employer as such.

The transferee is obliged to apply the collective agreement applied by the transferor to the employees transferred in the transfer until the end of the collective agreement period, even if the collective agreement is different from the one applied by the new employer to its previous employees.

The transferor and the transferee are jointly and severally liable for the employee's pre-assignment claims (e.g. overtime, holiday pay and holiday pay). The employee may recover these claims from either of them. Unless otherwise agreed, the transferor is liable to the transferee. The exception is in the case of bankruptcy, since if the transferor is a bankrupt, it is generally not liable for employment claims that were due before the transfer.

The transfer of the business does not change the due date of the employment claims, so, for example, the transferor does not pay the employee holiday pay for earned but untaken annual leave, but the transferee pays the employee's holiday pay for the period of annual leave after the transfer of the business, even if the leave year for which the annual leave was earned had already ended before the transfer.

The transferee is solely responsible for the employment claims due after the transfer.


The transferor and transferee may only terminate an employee's employment contract if there is a reason for termination under the Employment Contracts Act. The transfer of the business as such is not a sufficient reason for termination.

If you do not wish to transfer to a new company as a result of the transfer of the business, you have a special period of notice under the Employment Contracts Act. In the case of a transfer of a business, the transferring employee can terminate his/her employment contract with effect from the date of transfer if he/she has been informed of the transfer of the business at least one month before the date of transfer. The employee has this right irrespective of the length of the notice period he would otherwise have. If the employee learns of the transfer later, he may terminate his employment on or after the date of the transfer, but not later than one month after learning of the transfer. This special right of termination also applies to fixed-term employees.

Yes, the following situations are subject to negotiations under the Collective Bargaining Act:

  • dismissal of one or more employees, lay-offs, part-time work and unilateral modification of an essential term of an employment contract, considered by the employer for economic or production reasons.
  • the obligation to negotiate changes also applies to any substantial change in the duties, working methods, organisation of work, work premises or regular working hours of one or more employees which is at the employer's discretion and which affects the position of one or more employees and which falls within the scope of the employer's authority to manage the work.

The information obligation under the law on collective bargaining applies to both the transferor and the transferee. Both must inform the representatives of the categories of employees affected by the transfer of the date or planned date of the transfer, the reasons for the transfer, the legal, economic and social consequences of the transfer for the employees and the measures planned for the employees.

The transferor shall provide the above information in his possession to the representatives of the categories of employees in good time before the transfer takes place. The transferee shall provide the said information to the representatives of the categories of staff not later than one week after the transfer takes place.

The transferee shall provide the representatives of the categories of staff with an opportunity to ask further questions and provide answers to those questions.


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