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Home » Guide to working life » Employment relationships » Termination of employment » Transfer of business and dismissal
Last updated: 22.06.2023

Workers’ rights and obligations remain unchanged in the event of a business transfer

A business transfer means the transfer – typically, the sale – of a company, enterprise, entity or foundation, or the operational part thereof, to another employer. In a business transfer, employees transfer to the new employer so that their terms of employment remain unchanged.

In a business transfer, the new employer continues the same or similar operations. The employees transfer to the new employer as “existing employees”. This means that the rights and obligations arising from their employment relationships, as well as the related employee benefits, are transferred to the new employer.  

Termination of employment in the event of a business transfer 

A worker’s employment contract may not be terminated solely on the basis of a business transfer. In connection with a business transfer, both the previous employer’s and the new employer’s right of termination are assessed in the same manner.  

The transferor, or the previous employer, may terminate employment for financial reasons and reasons related to production only if work in the previous company has decreased significantly and permanently. The previous employer’s right of termination is limited to the period before the business transfer.  

The right of the transferee, or the new employer, to terminate employment is assessed on the basis of normal criteria, which also take account of the obligation to provide training and employment.  

A business transfer – that is, the sale of the company to a new owner – does not entitle the employer to terminate employment. The matter is examined on the basis of a case-by-case overall assessment.  

If the transferor has terminated an employment contract before the transfer, but the employment relationship is still in force (notice period) at the time of transfer, the employee will transfer to the new employer for the remaining duration of the notice period. Within the notice period, it must be determined whether the worker in question can be offered other employment after her or his notice period, either without training or after training. In other words, the new employer must determine at the end of the notice period whether there are grounds for termination. If the employment relationship is not continued, but there are no grounds for termination, the transferee is liable for the damage incurred by the worker. 

Worker’s right to terminate employment in the event of a business transfer 

As a rule, a fixed-term employment contract is valid for the specified period of time and cannot be terminated.  

However, according to the law, the employee has the right to terminate a fixed-term employment contract in a situation in which the employer transfers – usually sells – the company to the new employer. The employee may terminate their employment relationship to end on the date of the business transfer if she or he has been notified of the transfer no later than one month before the transfer. 

If notification of the transfer has been provided later, the employee may terminate her or his employment contract to end on the date of the transfer or no later than one month after the date of notification of the transfer.