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Employee Rights When an Undertaking is Transferred in Germany

1. Employees’ Rights

An undertaking, a business or a part of a business is defined for this purpose by the European Court of Justice and the German Federal Labour Court as an economic entity, which retains its identity irrespective of the transfer. All of the transferor’s employees automatically transfer to the transferee with the terms and conditions of their employment contracts and their seniority remaining intact. Prior to the transfer, each affected employee must be informed in writing about the transfer, its reasons, the background, the social and legal consequences and any further measures planned by the transferee.

The employee is entitled to object to the transfer of employment without giving reasons for his/her objection. In case of an objection, the employment will continue with the transferor. If the transferor is no longer in the position to offer a job to the employee, a dismissal for operational reasons may be socially justified.

2. Requirements for Predecessor and Successor Parties

The transferee is bound by all rights and obligations resulting from the employment contracts in existence at the time of the transfer and is also liable for pension commitments made by the transferor to the employees affected.

For more information on these articles or any other issues involving labour and employment matters in Germany, please contact Tobias Pusch, Partner at Pusch Wahlig Legal (www.pwlegal.net) at pusch@pwlegal.net
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