Restructuring and Employment
The Maintenance and Safeguarding of the Employees’ Rights in the Event of Transfer of Undertakings, Businesses, or Parts Thereof, Laws of 2000 (principal Law) and 2003 (amendment Law), came into operation on 7.7.2000 and 2.5.2003, respectively. In this Guide they are both presented and cited together as ‘the Law’.
The Law applies to the transfer of businesses, undertakings or parts of businesses or undertakings from one employer to another, as a result of a legal transfer or merger. The Law applies to public and private undertakings engaged in economic activities, whether or not they are operating for profit.
The Law does not apply in cases of:
- Administrative reorganization of public administrative authorities;
- Transfer of administrative functions between public administrative authorities;
- Seagoing vessels.
‘Transferee’ means any natural or legal person who, by reason of a transfer, becomes the employer in respect of the business, undertaking, or part of the business or undertaking.
- ‘Representatives of Employees’ means the representatives of employees provided for by law or practice.
- ‘Transferor’ means any natural or legal person who, by reason of a transfer, ceases to be the employer in respect of the business, undertaking, or part of the business or undertaking.
- ‘Employee’ means any person who works for another person (natural or legal) either under a contract of service or apprenticeship or in circumstances such as the existence of an employer-employee relationship may be derived.
The rights and obligations of the transferor arising from a contract of employment or an employment relationship existing on the date of a transfer, are by reason of such transfer, transferred to the transferee. Following the transfer, the transferee must continue to observe the terms and conditions agreed in any collective agreement, to the extent
applicable to the transferor, until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement, subject to a minimum period for observing such terms and conditions of one year.
The above obligation does not apply in relation to the rights of employees to old age, invalidity and survivors’ benefits under supplementary occupational or inter-occupational schemes (with the exception of rights under the Social Insurance Law). However, employees no longer employed in the transferor’s business at the time of the transfer, maintain their acquired or prospective entitlement to old age or invalidity benefits, including survivors’ benefits, under occupational or inter-occupational pension schemes.
The transfer of a business or undertaking or part of a business or undertaking does not in itself constitute grounds for dismissal, by the transferor or the transferee. This, however, does not prevent dismissals that may take place for economic, technical or organizational reasons, entailing changes in the workforce. In essence, lawful dismissals may arise, if the conditions created by the transfer result in redundancies within the meaning of section 18 (c) of the Termination of Employment Law.
If the contract of employment or the employment relationship is terminated by reason of the transfer involving a substantial change in the terms and conditions of employment to the detriment of the employee, the employer is regarded as having been responsible for the termination of the contract of employment or the employment relationship.
Bankruptcy, liquidation or other insolvency proceedings In case of bankruptcy, liquidation or other insolvency proceedings, which have been instituted with a view to liquidating the assets of the transferor under the supervision of
a competent legal authority, the relevant provisions of the Law for the maintenance and safeguarding the employees’ rights do not apply.
Where at the time of the transfer, the business or undertaking or part of the business or undertaking, preserves its autonomy, the status, representation and functions of the representatives of the employees affected by the transfer are preserved on the same terms and subject to the same conditions, as existed before the date of the transfer, by virtue of law, regulation, administrative provision, collective agreement or practice. This, however, does not apply, when, according to existing law, regulation, administrative provision, collective agreement or practice, or following an agreement with the employees’ representatives, the conditions necessary for the appointment of such representatives or for the constitution of the representation, are fulfilled.
When the business, undertaking or the part of the business or undertaking does not preserve its autonomy, the transferor and the transferee take the necessary measures to ensure that the employees, who are represented before the transfer, continue to be properly represented during the period necessary for the reconstitution or appointment of the representation of the employees, in accordance with the law or practice. If the term of office of the representatives of the employees affected by the transfer expires as a result of the transfer, the representatives continue to enjoy the protection provided by the laws, regulations, administrative provisions, collective agreements or practice.
The transferor, in good time prior to the transfer and the transferee in good time, and in any event before the employees are directly affected by the transfer as regards their conditions of work, are required to give the following information to the employees affected, or to their representatives:
- The date or proposed date of the transfer;
- The reasons for the transfer;
- The legal, economic and social implications of the transfer for the employees, and
- The measures envisaged in relation to the employees.
The obligation for information applies irrespective of whether the decision resulting in the transfer is taken by the employer or an undertaking controlling him. Moreover, in considering alleged breaches of the information and consultation requirements provided for by the Law, the argument that the breach occurred because the information was not provided by an undertaking controlling the employer, is not acceptable as an excuse.
When the transferor or the transferee envisages measures in relation to the change of the status of work of the employees, he is required to initiate consultations on appropriate measures, in good time before the transfer, with the employees or their representatives with a view to reaching an agreement. The information and consultation must at least cover the envisaged measures in relation to the employees and must be given and take place, respectively, in good time before the transfer is effected.
The competent court for resolving disputes (of civil nature) arising out of the operation of the Law is the Labour Disputes Court. An employer who abuses the insolvency proceedings with a view to depriving the employees of their rights, is guilty of an offense and is liable, on conviction, to a fine not exceeding €1.708, without prejudice to the rights of every affected employee to compensation.
An employer who violates the provisions relating to information and consultation is guilty of an offense and is liable, on conviction, to a fine not exceeding €854.
Where the employment relationship is terminated because of the transfer of the business, whether by the transferor or the transferee, for reasons other than economic, technical or organizational, involving changes in the level of the workforce, dismissal is unlawful and the employee is entitled to compensation calculated on the basis of the years of service and the terms of employment applicable to the business of the transferor, subject to the provisions of the Termination of Employment Law of 1967-1994.
Dismissal as a result of the transfer, taking place before the transfer, is considered as dismissal by reason of the transfer. Where the employer terminates the employment relationship for economic, technical or organizational reasons, before or after the transfer of the business, the employee is entitled to redundancy payment in accordance with the provisions of the Termination of Employment Law of 1967-1994.
The competent Authority for implementing the Law is the Department of Labour Relations.