The law stipulates a specific procedure for transfers of business (Art. 333 ff. OR), which must be strictly adhered to.
If a business or part of a business is transferred from the employer to an acquiring company, the employment relationships of the employees working for the business/part of the business are transferred by law to the acquiring company, provided that the employee(s) concerned do not reject the transfer. If the employee rejects the transfer, the employment relationship ends with the statutory (not: the contractually) notice period (Art. 333 OR).
According to case law, a business or part of a business is a “permanent, self-contained organizational unit […] that participates independently in economic activities; however, the provision also applies to parts of businesses, i.e., organizational units that lack economic independence” (BGE 129 III 335 E. 2.1; free translation by the author).
How should the employer proceed if a transfer of business/part of a business is planned?
First step: Check whether measures affecting employees are planned (e.g., terminations, salary reductions, changes in working hours or place of work, etc.).
- If no measures are planned:
Simply provide information about the reason for the transfer and the legal, economic, and social consequences of the transfer for the employees (information letter).
- If measures are planned:
– In addition to providing information, it is also mandatory to conduct a consultation with the employees (information and consultation letter with a deadline for suggestions, if any).
– Review of the proposals and (only then) decision on the planned measures.
– After consultation and decision: letter to the employees affected by the transfer of business regarding the right of refusal and setting a deadline for any declaration of refusal.
– Important: The information and consultation must take place before the decision on the planned measures.
The contact person on employee’s side is the employee representation or (if there is no such representation) all employees.
Collective labor agreements applicable to the transferred employment relationship must also be complied with by the acquiring company for a period of one year. There is a joint liability of the transferring and acquiring company (Art. 333 CO).
Terminations due to a transfer of business must not constitute a circumvention of Art. 333 ff. CO. They may be permissible if, for example, there are economic reasons for the termination. Terminations for the purpose of circumventing the law would be null and void. This means that the employment relationship would be transferred to the acquiring company (cf. BGE 136 III 552).
The applicability of the provisions on the transfer of business and, in particular, the admissibility of terminations due to the transfer of business must be carefully examined in detail in advance.
