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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

In conjunction with the transfer of a business from one employer to another, the rights and obligations under employment agreements and employment relationships that existed at the time of the transfer to the new employer shall also be transferred. Notwithstanding the above, employment agreements and employment relationships shall not be transferred to a new employer if the employee opposes such a transfer. The employees will, in such a case, remain employed by the transferring company. If the transferring company has no business left, such employees will be made redundant. Furthermore, the transferor’s collective bargaining agreement will continue to apply also for the transferee where the new employer is not already bound by another collective agreement, which may be applied to the employees included in the transfer.

Where an employee’s employment agreement and the employment relationship have been transferred to a new employer the new employer shall be obligated, for a period of one year from the date of the transfer, to apply the employment terms and conditions of the collective agreement which the previous employer was bound to. The terms and conditions shall be applied in the same manner in which the previous employer was obligated to apply them. However, the foregoing shall not apply where the term of the collective bargaining agreement has expired or when a new collective agreement has begun to apply to the transferred employees.

Prior to the decision to transfer the business (or a part of it), the acquiring company, as well as the transferring company, must, as a rule, call for and conduct union consultations with the local union representatives under the applicable collective bargaining agreements. Even if the companies are not bound by collective bargaining agreements, they are obliged to consult with any trade unions of which any concerned employees may be members. Union consultations must be initiated and concluded before a decision regarding the transfer is made. If the consultation requirement is not observed, the breaching company may be obliged to pay damages to the unions concerned.

The rules relating to the transfer of a business are not applicable to share transfers. Lastly, Sweden has implemented the Transfers of Undertakings Directive 2001/23/EC.

Requirements for Predecessor and Successor Parties

The transferring company will remain liable (jointly with the acquiring company) towards the transferred employees for liabilities relating to the time prior to the transfer. However, the parties to a business transfer agreement are free to agree on a different distribution of liability between them.

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