The Working Environment Act Chapter 16 provides rights for the employees in case of a transfer of undertaking. According to the Working Environment Act Article 16-1, a condition for these rights to be applicable is that the undertaking must be an “autonomous entity, which retains its identity after the transfer”. The term is meant to implement the definition of transfer in Council Directive 2001/23/EC Article 1 No. 1 litra b and shall be interpreted in accordance with relevant case law from the Court of Justice of the European Union.
1. Employees’ Rights
The rights and obligations of the former employer ensuing from the contract of employment or employment relationships in force on the date of transfer shall be transferred to the new employer. The new employer is also bound by any collective pay agreement that was binding upon the former employer. An employee may oppose the transfer of the employment to the new employer. Employees who have been employed for a total of 12 months over the last 2 years before the date of transfer, and who object to the transfer of employment, have the right to new employment with the previous employer for one year from the date of transfer, unless the employee is not qualified for the position.
2. Requirements for Predecessor and Successor Parties
The previous employer and the new employer are obliged to discuss the transfer of the undertaking with the employees’ elected representatives as early as possible. This information shall include reasons for the transfer, date or proposed date of the transfer, the legal, economic and social implications for the employees, changes in circumstances relating to collective pay agreements, measures planned in relation to the employees, rights of reservation and preference and the time limit for exercising such rights. The same information shall also be given to the affected employees as early as possible.