Transferring and Working Employees
However, it is not unusual for the seller, as an employer, to have left, for example, part of the employees’ overtime or other receivables unrecorded, to which the employees become aware of their rights after the acquisition in the service of the new employer. Based on the transfer of the business, the new employer may not change the terms of the employees’ employment, for example working hours or wages. It is not possible to make changes to the terms and conditions of the transferred employees, they will be transferred as is. Transferring as old employees means that the employment relationship remains the same and uninterrupted, which affects, for example, salary, length of notice period and annual leave benefits.
Surprising and new demands from employees from the period before the acquisition are unfortunate and cause measures also between the seller and the buyer. In this case, unfortunately, you often have to dig out the deed of sale and examine what the sellers have insured and what the sellers are responsible for even after the sale. It is therefore important to carry out a good labor law due diligence check before the acquisition and find out as precisely as possible how comprehensively the seller has complied with the mandatory labor legislation.
When an independent part of a larger company is sold to a new owner, a situation sometimes arises where it is necessary to assess which employees belong to the transferred business. In general, employees who do more than 50% of their work in tasks related to the business that is the subject of the transaction are covered by the transfer. This also applies to support functions, in which case, for example, the payroll of the business to be transferred may be included in the scope of the transfer.
Termination or change of collective agreement after a business acquisition
Handing over the store is naturally not an independent basis for dismissal. Thus, the transferred cannot dismiss the transferred employees solely on the basis of the transfer of the business. However, it is common for a business arrangement to also transfer operations that partially or completely overlap with the receiving business. If this results in a substantial and permanent reduction in work, it is possible to terminate the employment relationship through the usual change negotiation process.
Sometimes a different collective agreement is followed in the business to be bought than what the buyer has followed in his business. It is not possible to change the collective agreement immediately after handing over the shop. Transferring employees are covered by the former collective agreement until the end of the contract period. If the employer decides to change the collective agreement, the collective agreement transferred to be observed in the handover must be terminated, if necessary, and after it expires the employer can start to observe the collective agreement in use.
Two floors of people
When a business is integrated into an already existing business in a merger, a situation may arise where employees doing the same job have different terms of employment. On the other hand, according to the employment contracts act, the employer also has an obligation to treat all employees equally, unless deviation from the requirement of equality is not justified taking into account the tasks and positions of the employees. The regulation prohibits the employer from unjustifiably placing employees in different positions.
In legal practice, it has been considered that the transfer of a business can constitute an acceptable reason for different wages, because the transferal is directly obliged by law to maintain the employee’s previous benefits. However, the requirement of equal treatment requires that the employer has a realistic plan to equalize the wage differences later, for example by allocating wage increases to lower paid personnel or in other ways.
Transferring a business as an acceptable reason for paying different amounts of salary is therefore not a permanent basis. Due to the passage of time or a change in circumstances, the acceptable reason may disappear. It is therefore necessary to consider the harmonization of wages and its costs even before handing over the shop: unfairness in wages causes unnecessary friction between employees in a situation where the employer often needs to get the personnel to work together productively.