On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer?
When a business or other undertaking is taken over, by another person from the current employer, any employee in employment shall be deemed to be in employment by the ‘new’ employer. The ‘new’ employer shall also take on all the rights and obligations which the employee had prior to the business sale/transfer of undertaking. By way of general information this is referred to as a transfer of the undertaking in the EIRA.
Not all business sales would constitute a transfer of undertaking; in fact the mere transfers by share take-over would not constitute a transfer of undertaking due to the fact that when a company’s shares are sold to new shareholders, there is no transfer of the business, the same company continues to be the employer. The transfer of assets only and transfer of a contract to provide goods or services (where this doesn’t involve the transfer of a business or part of a business) may also not be considered as a transfer of undertaking.
What employee rights transfer on a business sale? How does a business sale affect collective agreements?
All employee rights transfer upon a transfer of undertaking, the new employer shall take on all the rights and obligations which the employee had prior to the transfer of the undertaking.
Post the transfer of undertaking, the terms and conditions agreed in any collective agreement shall continue to be observed, until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement.
Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult?
Should the transfer of undertakings result in measures affecting the conditions of employment of the employees, there shall be discussions between both the previous and new employer (and also the employees’ representative).
These discussions shall begin within 7 working days from the day on which the employees’ representatives have been notified of the intended transfer and such consultations shall cover the impact of the transfer on the employees’ conditions of employment. The representatives of the employees affected by the transfer, shall be informed of:
- the date or proposed date of the transfer;
- the reasons for the transfer;
- the legal, economic and social implications of the transfer for the employees; and
- the measures envisaged in relation to the employees.
The above notice shall be made in writing and shall be delivered to the employees’ representatives at least 15 working days before the transfer is carried out or before the employees are directly affected by the transfer as regards their conditions of work and employment, whichever is the earlier. The Director responsible for Employment and Industrial Relations shall also be informed on the same day as the employee’s representatives.
The Transfer of Business (Protection of Employment) Regulations, impose a sanction of €1,164.69 in respect of any person who is in breach of the said Regulations. Such sanction shall be in respect of every employee affected by the transfer.
Can employees be dismissed in connection with a business sale?
The transfer of an undertaking shall not in itself constitute sufficient grounds for dismissal of employees, however this is not applicable in cases where it would be necessary to dismiss a number of employees due to economic, technical or organisational reasons entailing changes in the workforce.
Are employers free to change terms and conditions of employment in connection with a business sale?
Upon a business sale/transfer of undertaking the terms and conditions of an employee should remain unchanged. Moreover if an employee terminates his/her employment due to a substantial change in the conditions of employment as a consequence to the transfer of undertaking, the employer shall be responsible for such termination and a claim may be brought before the Industrial Tribunal.