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09. Transfer of Undertakings
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09. Transfer of Undertakings

Employees’ Rights in Case of a Transfer of Undertaking

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.

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. This does not apply if the new employer, within 3 weeks after the date of transfer, declares in writing to the trade union that the new employer does not wish to be bound. The transferred employees have, however, the right to retain the individual working conditions that follow from a collective pay agreement that was binding upon the former employer. This shall apply until the collective pay agreement expires or until a new collective pay agreement is concluded that is binding upon the new employer and the transferred employees.

The employee’s right to earn further entitlement to retirement pension, survivor’s pension and disability pension in accordance with a collective service pension scheme shall also be transferred to the new employer. The new employer may, however, decide to make existing pension schemes applicable to the transferred employees.

An employee may oppose the transfer of the employment to the new employer. An employee who objects to the employment transfer must notify the former employer of this within the time limit specified in the information given to the employees (see below). The period may not be shorter than 14 days after the information is given.

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. The right to new employment lapses if the employee has not accepted an offer of employment in a suitable position within 14 days after receiving the offer.

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. Most collective agreements also contain regulations in regard to information and discussion.

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