Informing employees in the event of transfer of ownership of a company to a newly formed company

If a company passes to a newly formed company by way of transfer of company ownership, the employees affected by the transfer of company ownership must be informed explicitly of the fact that the party acquiring the company is not obliged to draw up a social compensation plan; otherwise, the information will be incorrect.

It is for this reason, among others, that the decision of the BAG agreed with an employee who opposed the passing of his employment relationship after a long time, and asserted the continuation of the employment relationship with his old employer. The claimant had been working in a company for a good 20 years as “call-centre agent”. The call centre was transferred to a new employer in spring 2008 by way of a transfer of company ownership under Section 613a BGB (German Civil Code). The company taking over had been formed just a few months prior to the transfer of company ownership as so-called shelf company. In January 2008, the claimant received two letters from his previous employer (now the defendant in the legal action), in which he was informed of the forthcoming transfer of his employment relationship. The transfer of company ownership then took place on 1 March 2008.

In the summer of 2010, the party taking over the company announced the closure of the call centre taken over, and served notice of termination of all employment relationships in the call centre - including the transferred employment relationship of the claimant - for operational reasons. It was not until this point that the claimant retrospectively declared opposition to the transfer of his employment relationship - that had taken place a good two years previously - under Section 613a Subsection 6 BGB, and asserted the continuation of his employment relationship with the defendant. His old employer contested this. In particular, it invoked the fact that the opposition was not declared until 2010 and was therefore late, based on the information provided in January 2008. The claimant had by all means forfeited any continuing right of opposition by virtue of having worked for the party taking over the company for several years.

Incomplete information

The Federal Labour Court took a differing view and agreed with the claimant. The Federal Labour Court considered the information provided to the claimant to be incorrect, among other things because it contained no reference to the fact that the party taking over the company was a company formed only recently that benefited from the privileges of Section 112a Subsection 2 BetrVG (Works Council Constitution Act). Under this regulation, companies cannot, in the first four years following their formation, regularly be obliged by an existing Works Council to draw up a social compensation plan to reduce the economic disadvantages of employees affected negatively (e.g. indemnification in cases of loss of job) in the event of a so-called change in operations (Section 111 BetrVG). The constellation to be decided on by the BAG did not constitute a statutorily envisaged exception for new formations in connection with the legal restructuring of companies and groups of companies. The fact that the formation date of the party taking over the company, and thus also its privileged position under Section 112a Subsection 2 BetrVG, could easily have been deduced from the information, received by the claimant concerning the party taking over the company, is considered by the BAG to be immaterial. Rather, the BAG considers that the information as per Section 613a Subsection 5 BGB must make specific reference to the privileged position under Section 112a Subsection 2 BetrVG. The fact that the party taking over the company had undisputedly not yet planned the subsequent closure at the time of taking over the company – a fact also correctly invoked by the defendant in the case to be decided - is likewise immaterial.

No forfeiture

The defendant was likewise not able to successfully invoke forfeiting of the claimant’s right of objection. Over and beyond the mere continued work for the party taking over the company up until the announcement of the closure of the company taken over, the claimant had not created any other circumstances which, under the now established case law of the BAG, could have permitted the conclusion that he no longer wished to make use of his right of opposition.

Summary

The decision of the BAG confirms once more that the formulation of information letters under Section 613a Subsection 5 BGB requires extreme care, and that ultimately, from a practical perspective, the risk must always be reckoned with of courts subsequently considering information to be insufficient. In addition to careful preparation of a correct information letter, it is therefore important, in particular for the seller of the company, to whom opposing employees can “return” under Section 613a Subsection 5 BGB, to protect themselves against the economic consequences of any such late oppositions if possible.