Transfer of business / operational restructuring - eliminating legal uncertainties

The change of the economic conditions requires an increasing flexibility of the company organization. Outsourcing, restructuring, sale and acquisition of companies and parts of companies are part of the daily practice of companies in an economy with a high division of labour and global competition. Such processes also involve complex questions of employment law.

A transfer of an undertaking within the meaning of Section 613a of the German Civil Code (Bürgerliches Gesetzbuch - BGB) occurs if another legal entity continues the same economic unit in place of the previous legal entity while retaining its identity The central provision of employment law in connection with operational restructuring is the provision on the transfer of an undertaking in Section 613a of the German Civil Code (Bürgerliches Gesetzbuch - BGB). Transfers of undertakings are indispensable in a globally competitive economy, but often become a tightrope act for employers. Restructurings need clear and comprehensible regulations to support their implementation In particular, the obligation to provide information and the employee's right of objection enshrined in Section 613a of the German Civil Code (Bürgerliches Gesetzbuch - BGB) have developed - also as a result of case law - into traps under employment law in the context of the transfer of a business and lead to considerable legal uncertainty.
Thus, according to Section 613a (5) BGB, the previous employer or the acquirer of the business is obliged to inform the affected employees about the circumstances and consequences of the transfer of the business. The new owner of the business takes over the rights and obligations of the existing employment relationship unless the employee objects to the transfer of the employment relationship within one month after receipt of the information (Section 613a (6) BGB). The exact content and scope of the duty to inform are disputed. The period for the employee to object to the transfer of his employment relationship should therefore be set at three weeks. After the expiry of a preclusive period of three months, the objection must be excluded. Such a regulation ensures legal peace and legal certainty for employer and employee.
Order succession is not a transfer of business
The legal consequence of the transfer of an establishment or part of an establishment is the transfer of the employment relationships to the acquirer. By operation of law, the transferee becomes the contractual partner of the transferor's employees, insofar as these are to be assigned to the business or part of the business acquired by him. The transfer of an undertaking must therefore take place within clearly defined limits. The reassignment of a contract does not constitute a transfer of an undertaking. The ECJ also emphasises that the legal consequences of a transfer of an undertaking do not occur if there is merely a new award of a contract. The ECJ should deepen this approach and provide more legal certainty by means of clearer demarcation formulas that allow for an unambiguous distinction between transfer of an undertaking and succession to a contract.
Maintain adaptability in working conditions
Until 2005, the BAG considered a clause in an employment contract which referred to a collective bargaining agreement "in the respective applicable version" to be a so-called equality agreement. According to the BAG, the objective of such a clause was to place employees who were not directly bound by a collective bargaining agreement on an equal footing with those who were members of a trade union. If the business was transferred and the collective agreement therefore lost its validity, future amendments to the collective agreement did not apply to the employees concerned.
In the meantime, the BAG assumes that collective agreements referred to are generally authoritative in the respective applicable version. They are no longer "frozen". Amendments to the collective agreement are effective even if the acquirer of the business has no influence on changes.
Arbeitgeberportal