Employees’ Rights in Case of a Transfer of Undertaking
Under Presidential Decree 178/2002, on the effective date of the transfer all employees of the transferred business are transferred to the transferee by operation of law (automatic transfer); therefore, consent is not required. After the transfer, the transferee continues to be bound by all terms of the transferred employment contracts and applicable collective labour agreements, as they existed at the time of the transfer (meaning that the transferee cannot unilaterally amend the employment terms and conditions to the detriment of the employees, while in case of future termination by the transferee the employees will be entitled to severance indemnity for their entire period of service including service with the transferor).
Pursuant to Presidential Decree 178/2002, the transferor is obliged to inform the employees (in the absence of employee representatives) in writing (usually in the form of a letter) about the following: a) the (proposed) date of the transfer; b) the reasons for the transfer; c) the legal, economic and social implications for the employees and d) the envisaged measures in relation to the employees. Such information must take place in good time before the transfer (the law does not provide for a more specific timeframe; however, 3 to 6 weeks before the transfer would be a reasonable time to inform the employees). When the transferor or the transferee envisage measures affecting the employees’ status (e.g. redundancies, changes in employees’ benefits etc.) they are also obliged to consult with the employees’ representatives with a view to reaching an agreement.
Non-compliance with the above information and consultation obligations may result in the imposition of fines (up to Euro 50,000) upon the transferor and/or the transferee.
