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Advice and Tips

You’re caught up in your company’s transfer – what should you do?

Written by Tekna’s Legal Department Published: Aug. 15 2023

The term “business transfer” means that all or part of a business is transferred to a new owner. When this happens, it’s important to know your rights and obligations. Below you’ll find tips on what you should do if you’re caught up in this situation.

Merger and demerger are concepts that are often used about this process. Both terms mean that a transfer of people, equipment and machines to another business is taking place. However, according to the Working Environment Act, a transfer of shares from one owner to another doesn’t involve a transfer.

How might a transfer affect me?

A transfer means that your work relationship moves from your current employer to a new one. When this happens, it’s important that you know your rights and obligations. This applies especially to the kind of information you’re entitled to receive, what can be transferred and what you shouldn’t expect to bring along to your new employer. You’ll often be offered a new employment contract; if this happens, you should read this contract carefully before signing it.

The company union representative’s role

The transfer itself – and any possible relevance to you – should first be discussed with your company union representative in accordance with the rules appearing in the Working Environment Act §16-5. The businesses that are merging should also draw up a merger plan; you have the right to read this plan.

Right of reservation

If you feel you’re not being served by changing employers, or for any other reason don’t want to move to a new employer, you can use your right of reservation in acordance with the rules laid out in the Working Environment Act §16-4. This means that your current employment relationship ends at the same time as the transfer, or, in other words, from the time the merger takes place. This might mean that the notice period in to your employment contract will be shorter. If you don’t have a new job that you can start immediately, Tekna recommends that you go along to the new employer and look for new challenges from your new workplace.

Right to choose

In a limited number of cases, an employee may have the right to stay with their first employer; however, this may only happen in partial company transfers. The employee’s right to choose is not legislated; also, the boundaries for doing so have been drawn up by the courts. These state that transferring to a new employer must lead to significant negative changes in the employee’s situation. If you are considering practicing your right to choose, contact Tekna’s Legal Department for an assessment of your case.

What you can expect from a new employment contract

The Working Environment Act §16-2 nr 1 states that any previous employers’ rights and obligations resulting from an employment contract or employment relationship and existing at the same time the transfer is taking place are to be transferred to the new employer.

It is your individual rights that are being transferred, and they must be agreed upon in the either the employment contract or a different document; alternately, you have to show that you have this right as a result of for instance your current employment relationship. The nature of this right is usually connected with an assessment of what’s written in your employment contract. It’s important to be clear over the fact that both your old and new employers are responsible for giving you adequate information about the transfer before you decide if you want to go along with it or not. This is evident in the Working Environment Act §16-6.

According to Provision §16-5 nr 2, your employer must give you information about these transfer-related consequences:

  • legal
  • financial
  • social

Legal consequences

Your employer must make sure that you (the employee) are given complete information about these three conditions. You can read this in Provision §16-2, which describes the rights to be transferred from the old employer to the new one. Also, please note that even if it may look like all of your benefits and rights in the old employment relationship will apply in the new one, there are several limitations to be considered:

  1. It is your individual rights that are being transferred, which are often ones laid out in your employment contract. This means that any points not previously agreed upon between an employer and employee (for example points outlined only in a personnel handbook) expire after a transfer takes place. A new employer may or may not have similar points in their own personnel handbook.
  2. Not all individual rights may be transferred; these usually expire. Typical examples include bonuses, stocks or options – in other words, rights that are so closely connected with the former employer that they can’t be transferred. In this situation questions may arise about whether the new employer should or must compensate for their loss. We can’t give any absolute answer to this question, but it is natural to discuss it with your company union representative(s) in accordance with Provision §16-5.
  3. Collective bargaining agreements expire if the new employer chooses to declare themselves unbound by the collective bargaining agreement. If you have individual rights because of this agreement, these may in this situation still be transferred – but only in the remaining time the agreement is valid. If the agreement is valid for one year after the transfer date, you are allowed to keep your rights during this year.
  4. Any collective pension plans with your former employer expire if your new employer chooses to offer an already existing plan for those to be transferred; otherwise, a new collective pension plan must be created. However, AFP isn’t a collective occupational pension and so can’t be transferred to a new employer. This means that AFP rights expire if the transfer takes place in a business that is not associated with the AFP plan.

Financial consequences

A transfer might lead to your getting new - and perhaps worse - terms in your new employment relationship than you had before. These changes might cause you to consider using your right to reserve yourself against the transfer. Our opinion is that your employer should create an overview of the terms offered by your former and new employer. They should give a comprehensive explanation of the value of any benefits you’ll keep and those you’ll lose as a result of the transfer. You’ll then have a better basis for being able to assess if you want to keep on developing the new employment relationship.

Social consequences

Social consequences of the transfer may involve the business organization and its working, cooperation and/or management styles.

Even if company union representatives are informed early on in the process and share this information with you because you’re a Tekna member, it’s important that you yourself are proactive and gather information about the upcoming transfer. You can either do this by asking questions at company meetings, giving your input to a company union representative or contacting your employer yourself to initiate a discussion.

If you still have questions, we recommend that you get in touch with a company union representative at your workplace or Tekna’s Legal Department.

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