Why did you sell your business 1
Transfer of operations part 1:
More and more employees are feeling insecure. The company or a division of the company is to be sold. What does this mean for you as an employee? Has there been a transfer of business at all or only a partial transfer of business. Are you or have you been adequately informed about this by the employer? What rights do you have as an employee in this regard? Are you even threatened with dismissal? Should you object to the transfer of business or should you not? What happens if you do not object to the transfer of operations? How should you react if the employer offers you a termination agreement beforehand?
Read the answers to your questions here. If you are informed, you also know how to react correctly.
What is the topic of a transfer of business all about?
When an employer sells the company, the question always arises what happens to the employees and their employment contracts. The employment relationships actually exist with the old company owner. But if he sells the company, he can no longer employ the workers and then it would actually be entitled to terminate the employment relationship for operational reasons. However, this would render the employees unlawful, which is why the law stipulates in Section 613 a of the German Civil Code that the new business owner will in principle assume all rights and obligations of the employee's employment relationship with the old business owner at the time of the transfer of business. A transfer of business ultimately means that although the employer changes, the employment relationships otherwise continue to exist as they were with the old employer. Therefore it is not necessary to sign a new employment contract with the new employer. The old employment contract continues unchanged.
Section 613a BGB reads as follows:
(1) If a company or part of a company is transferred to another owner through a legal transaction, the latter takes on the rights and obligations arising from the employment relationships existing at the time of the transfer. If these rights and obligations are regulated by the legal norms of a collective agreement or a works agreement, they become the content of the employment relationship between the new owner and the employee and may not be changed to the detriment of the employee before the end of one year after the date of transition. Sentence 2 does not apply if the rights and obligations of the new owner are regulated by the legal norms of another collective agreement or by another company agreement. Before expiry of the period in accordance with sentence 2, the rights and obligations can be changed if the collective agreement or the works agreement is no longer valid or if there is no mutual collective agreement within the scope of another collective agreement, its application is agreed between the new owner and the employee.
(2) In addition to the new owner, the previous employer is jointly and severally liable for obligations under paragraph 1, insofar as they arose before the point in time of the transfer and are due within one year after this point in time. If such obligations become due after the date of transition, the previous employer is only liable for them to the extent that corresponds to the part of their assessment period that has expired at the time of transition.
(3) Paragraph 2 does not apply if a legal person or a partnership expires through conversion.
(4) The termination of the employment relationship of an employee by the previous employer or by the new owner due to the transfer of a business or part of a business is ineffective. The right to terminate the employment relationship for other reasons remains unaffected.
(5) The previous employer or the new owner must inform the employees affected by a transfer in writing about
- the time or the planned time of the transition,
- the reason for the transition,
- the legal, economic and social consequences of the transition for workers and
- the measures envisaged with regard to employees.
(6) The employee can object to the transfer of the employment relationship in writing within one month after receipt of the information in accordance with paragraph 5. The objection can be made to the previous employer or the new owner. "
What if not the entire company is sold, but only part of the business, so-called partial business transfer?
Companies also have the option of not selling the entire company, but only a so-called part of the company. In practice, this happens more often than you think and usually whenever economic, technical or organizational problems arise that the company would like to eliminate by outsourcing operational departments. For example, no more in-house cleaning staff should be employed, but a cleaning company should be employed externally, or the canteen that was previously operated should be leased to a third-party tenant who then operates the canteen, or the entire marketing should no longer be carried out in the company itself, but from a design office. Such decisions are also known under the term “outsourcing”.
But does “outsourcing” also fall under Section 613 a of the German Civil Code? Can one also speak of a transfer of a part of the company so that the employees transfer to the new employer?
The first question to be answered here is whether the outsourced operating department, e.g. the previous canteen, has a independent economic unit within the company. There are various points that speak for the fact that it is an independent economic unit, such as did the department have its own customers or orders, did it employ specialized workers to process it, did the department have its own organization, did it have its own rooms , own work equipment that only she used, etc. It is an independent part of the company if these questions can be answered with, for example, yes. The new tenant of the canteen continues to operate it in the old rooms, the kitchen and dining room remain the same, the same equipment is used and the customers are, as before, the company employees of the old company as well as those who regularly eat there from other companies . Some old employees of the canteen were offered new employment contracts with the new tenant, which they also signed. In this case, § 613 a BGB applies. The canteen has been transferred to the new tenant as an independent economic unit. This transfer of operations now applies in favor of all employees who previously worked in the canteen. Their employment relationships are also transferred to the new tenant. Even if he didn't want to sign a new contract with the old canteen workers.
But what if there are no material resources such as a canteen, e.g. the kitchen, the dining room, appliances, etc. At pure service companies, such as a marketing department or a sales department, this is seldom the case and existing PCs or printers etc. are simply common, but do not shape the service. What then has to apply in order to assess whether there is an independent economic unit that will be transferred to the new acquirer.
In the case of service companies, other points are simply added to the assessment that must be taken into account and that have more weight here. An acquirer takes over the department's know-how, a certain work organization of the department, the special knowledge of the employees employed there and the customers and clients of the department. Therefore, it is not only relevant whether material resources are handed over, but whether a so-called organized set of people and / or objects are available for the long-term pursuit of an economic activity with its own objective.
In the case of pure service companies, such as cleaning, security, marketing, sales, this assessment means that the result of a company or part of the company depends on whether the main workforce is taken over, i.e. a significant part of the workforce in terms of number and expertise is taken over. It then no longer matters whether the office, i.e. the lease for the office or the furnishing of the office, is taken over. It depends on whether, for example, the current orders and customers should be taken over and how many of the employees should work for the new owner, etc.
Of course, this question is not easy to answer. Therefore, courts examine more or less with the following question whether an economic unit and thus a transfer of business is to be affirmed. Try this too and come to a result.
- Pure production company or service company? What is the main added value?
- For the production operation, it depends essentially on the material resources, are they transferred? Such as EDP, production equipment, office equipment, vehicles, etc.
- For the service operation, the so-called ideal operating resources, i.e. the know-how that is sold, are essential. For example, a special work organization, a special service, a special product that is sold on. The question to be asked is whether there is a special operational purpose.
- Will significant parts of the workforce be taken over based on the number and knowledge of the employees?
- Are customers, customer orders or other relationships with suppliers etc. taken over?
- Should the activity essentially continue in the same or similar manner after the sale, e.g. should operating methods and work organization essentially remain the same even after the takeover ’?
- Should the department be continued immediately after the takeover or will it be interrupted for a longer period of time? Temporary interruptions do not prevent a transfer of business, unless the activity is really to be interrupted for several months.
The more of the above points can be answered positively, the more it can be assumed that there is an operational transfer of an economic unit. If this can be answered in the affirmative, then the employees whom the new acquirer does not want to employ are entitled to continue to be employed by the acquirer and who must also pay them. Because then their employment contracts also pass.
What do employees have to be informed about in the event of a transfer of business?
According to Section 613 a (5) BGB the previous employer or the new owner must contact the employees concerned in frontthe transfer of operationsinform in writing about the following points:
- the time or the planned time of the transition,
- the reason for the transition,
- the legal, economic and social consequences of the transition for workers and
- the measures envisaged with regard to employees.
This information must be complete.
Employers should observe the information requirements very carefully! If the information is incomplete, the company will nevertheless be transferred, but the deadlines for the employee's objection do not start. This can create a problem if the employee objects and the vendor would have to re-employ the employee.
Can an employee defend himself against the transfer of business, i.e. that his employment relationship is transferred to a new employer?
Of course, the employee does not simply have to accept a change of employer. The employee has the right to a transfer of operations within a month, after having been informed of the transfer of business, to object, Section 613a (6) BGB. The monthly period begins with the receipt of the information about the planned transfer of business.
However, if the information that the employer has to provide to the employee about a planned transfer of business is incomplete and not legally correct, the period of one month for the objection does not apply. In this case, employees could in principle exercise their right of objection without a time limit. If the employee objects even a long time after the transfer of business because he was not properly informed, the objection even has retroactive effect, i.e. the old employment relationship is treated as if it had never been interrupted.
Of course, the limit of forfeiture always applies here. As an employee, you cannot of course refer to it if you have worked for the new employer for a long time and the employer then terminates the employment relationship or if the employee ends the employment relationship with the new employer himself. There is no such thing as a double bottom.
The objection can either be declared to the previous employer or to the new owner.
If the employee does not object and this month's period has expired, the employment relationship is transferred to the acquirer of the company as the new employer.
What happens if the transfer of operations is objected to? Will I then be fired by my old employer?
If the employee objects to the transfer of business within one month, his employment relationship will not be transferred to the purchaser, but the employment relationship with the old employer, i.e. the seller, will continue unchanged.
If, however, the employee cannot continue to work in the old company due to a lack of job or opportunity, the employer could also give him / her due operational dismissals - and these dismissals are usually effective. As an employee, you always have to take this risk into account.
If the old employer then decides to issue a termination for operational reasons, it must also be taken into account that the Federal Labor Court does not favor those who have declared an objection, but rather on the contrary. Because in the context of a business-related dismissal and the social selection of the employer required for this, all comparable employees must then be considered, but the reasons for the objection of the employee who objected to the transfer of business are also taken into account in the social selection. This is because the employee who was not affected by the transfer of business should now be included in this social selection
For example, an employee has objected to a transfer of business units. He was then dismissed for operational reasons and has filed an action for protection against dismissal. Among other things, on the grounds that even after the transfer of the business unit there were still enough work tasks at the employer that would enable him to continue his employment and, in addition, a long-term deterioration of his working conditions was to be feared with the business transfer. The BAG had to decide on this and decided that the objection to the transfer of business does not protect against operational dismissal. If the company selling the part of the business cannot continue to employ the contradicting employee, it can terminate the employee for operational reasons, provided that an appropriate social selection is made (Section 1 (3) KSchG). When examining the need for social protection, however, it should also be taken into account that the employee voluntarily gave up his previous work opportunity with the new employer through the objection and only then created an urgent operational requirement for the dismissal with the old employer.If the reasons for the objection to the transfer of business, as in the present case, are not of great importance, since a significant deterioration in working conditions was not to be expected in the near future, the opponent in the social selection can only oust a work colleague if he is significantly less in need of protection is. In the present case, the company had therefore made an appropriate social selection.
This should also always be taken into account when the employee objects to a transfer of business.
Whether employees who cannot be terminated according to the collective agreement should express an objection is always a question of the individual case. Because they cannot be terminated, they enjoy increased protection in the event of operational dismissals, but this does not mean that they cannot be terminated at all. Because even a termination for operational reasons can be based on § 626 BGB and accordingly as an extraordinary termination for operational reasons, in compliance with a social expiry period - which must be at least as long as the regular notice period for ordinary notice. This applies in particular if the operation of the sale of the business is then to be closed in its entirety. This then practically eliminates the existing non-cancelable. However, it may be interesting if the employer does not want to close the entire company, but only individual departments. Then dismissal protection suits usually have a good chance of success.
Does a new employment contract have to be signed with the new employer when the company is transferred?
Section 613 a of the German Civil Code (BGB) states that in the event of a business transfer, the new business owner assumes all rights and obligations of the employment relationships existing at the time of the transfer. This means that although the person of the employer changes by law, the employment relationship and thus also the existing employment contract continue to apply unchanged. Any agreements to the detriment of an employee cannot be made to this effect, they would simply be ineffective.
Therefore, the employee does not have to sign a new employment contract with the new employer.
You can think about this as an employee, but you don't have to. It is worth considering if the employment contract does not contain worse but better conditions than the old employment contract and very important: As the beginning of the employment relationship, the previous periods of service with the old employer are expressly recognized.
If the employer does not recognize these periods of service, this would be ineffective, just as if the employment contract contains poorer conditions and there is no objective reason for this. Because that would also be an inadmissible deviation from the legal regulation of § 613 a BGB and be seen as an inadmissible circumvention transaction. But then why should you sign at all or, if in doubt, expose yourself to an unnecessary legal dispute?
Employees should always be careful when the employer does not present them with a new employment contract for signature until some time after the transfer of business. The case law may also recognize negative changes to the detriment of the employee if it cannot be proven that this is only intended to circumvent the protection of the existing status of § 613a BGB.
If the new employer has a new employment contract to be signed, you as an employee should definitely have it checked by a lawyer specializing in labor law.
What if the old employer offers the employee a termination agreement before the transfer of business?
In principle, the employee should then exercise caution and consult a lawyer specializing in labor law. Because why should he sign such a termination agreement if his employment relationship is transferred to the new acquirer.
Such a termination agreement would in any case be void as a bypass transaction if it were only intended to prevent the legally automatically ordered transfer of operations in accordance with Section 613a (1) of the German Civil Code (BGB). However, it could also be effective if it is to be concluded without any relation to the transfer of operations, e.g. because the employee has asked for it. But why should an employee do this and then also be given a blocking period from the employment office.
Can the old or the new employer resign due to a transfer of business?
Section 613a (4) of the German Civil Code says this: TheTermination of employmentof an employee by the previous employer or by the new owner due to the transfer of a company or part of a company is ineffective. The right to terminate the employment relationship for other reasons remains unaffected.
It may not be terminated "because of the transfer of operations". However, termination for other reasons is still possible. The old employer or the new employer could give notice of termination before, during or after a transfer of business if the main reason for the dismissal is not the transfer of business. Personal or behavioral reasons are therefore generally permissible. If an ordinary termination for operational reasons is declared, it can be assumed that it was pronounced due to the transfer of operations. But if the company seller or purchaser presents a concrete restructuring concept and this is not open to attack, such redundancies for operational reasons could also be legally recognized as effective.
Who is liable in the event of a transfer of business if there are payment arrears, e.g. Christmas bonus?
Section 613 (2) of the German Civil Code determines: In addition to the new owner, the previous employer is jointly and severally liable for obligations under paragraph 1, insofar as they arose before the point in time of the transfer and are due within one year after this point in time. If such obligations become due after the date of transition, the previous employer is only liable for them to the extent that corresponds to the part of their assessment period that has expired at the time of transition.
Pure Christmas bonus is earned every month to 1/12 with the monthly work performance and then paid in November with the salary. The company is transferred to the purchaser in August. In this case, the old employer is liable in accordance with Section 613 (2) sentence 2 BGB for the payment of the Christmas bonus for 7/12, for the months from January to July of the current year. If the buyer then cannot pay in November, the old employer is liable for 7/12 of the Christmas bonus to the old employee.
In Part 2 on the transfer of operations, I will explain to you whether the works council has a say in the context of a transfer of operations, whether social plans are to be drawn up for the employees and what happens to the old collective agreements or works agreements that are favorable for the employee when the company is transferred. Do these still apply or not?
Do not balance any further, find out all about it!
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