1. Employees´ Rights
There are three different alternatives under Colombian labor laws for transferring employees from one employer entity to another employer entity in a business acquisition process. Those alternatives are: (i) employer substitution; (ii) termination and rehiring; and (iii) assignment of the employment contract. Employees’ rights vary according to each alternative.
2. Requirements for Predecessor and Successor Parties
Requirements depend on the transfer alternative, as follows:
- Employer substitution: Under an employer substitution scenario, all employment contracts of a business unit are transferred to a new employer without termination. In order for the employer substitution to take place, the following 3 elements must be met: (i) change in the employer; (ii) continuity of the company or business; and (iii) continuity of the rendering of the personal services by the employee. The employer substitution may operate without the consent of the employees.
- Termination and rehiring: In order to extinguish the current employment relations between the company and the employees before hiring them through a new entity it is necessary for the existing employment agreements to be terminated. The termination of the employment agreements can occur by unilateral decision of the employer, by the resignation of the employees or by mutual agreement of the parties.
- Assignment of employment contract: It is a commercial and civil figure established in Colombian laws, through which one of the parties transfers its position in the contract to a third party. Therefore, a transfer of the employment agreement will take place when a new employer replaces the position of the initial employer under the employment agreement. The employee must be part of the assignment agreement and expressly consent to the change of employer.