Transfer of Undertaking in Germany: Your Rights When Your Employer Is Sold

A transfer of undertaking (Betriebsübergang) occurs when a business or a part of it moves to a new owner and keeps its identity, for example through a sale, outsourcing or the takeover of a contract. German law protects employees in this situation (Section 613a of the Civil Code): your employment passes to the new owner automatically, with all rights and obligations.

For you, this means continuity. But you have a right to be informed and a right to object, with a strict deadline.

When Is It a Transfer of Undertaking?

A transfer requires that an economic unit keeps its identity under a new owner. Courts consider, among other things:

• whether assets such as machines, buildings or customer contracts are taken over,
• whether a large part of the staff is taken over,
• whether the activity continues in a similar way.

Typical examples are the sale of a company's operations (asset deal), the outsourcing of IT or canteen services with the staff, or a business sale in insolvency.

Not a transfer: a sale of shares (share deal). Your employer stays the same company, only its owners change.

What Passes to the New Owner

• your employment contract with all its terms,
• your length of service, which counts for notice periods and dismissal protection,
• entitlements such as holiday, overtime credits and company pension.

Terms from collective agreements or works agreements usually continue, either collectively or as part of your individual contract. In the latter case, they cannot be changed to your disadvantage for one year.

The old employer remains jointly liable for claims that arose before the transfer and are due within one year.

The Information Letter

The old or the new employer must inform you in writing before the transfer about:

• the date or planned date of the transfer,
• the reason for the transfer,
• the legal, economic and social consequences for you,
• the measures planned for employees.

The information must be complete and correct. In practice, many information letters contain errors.

Your Right to Object

You can object to the transfer of your employment in writing within one month of receiving proper information. The objection can be sent to the old or the new employer.

Consequences of an objection:

• your employment remains with the old employer,
• if the old employer has no job left for you, it can dismiss you for operational reasons,
• you may lose your job without having a job with the new owner.

If the information was defective, the one-month deadline does not start. You can then object later, but the right can be lost if you have accepted the transfer over a longer period, for example by working for the new owner for years without objection.

Dismissal Protection

A dismissal by the old or the new employer because of the transfer is invalid. Dismissals for other reasons, such as restructuring by the new owner, remain possible under the usual rules. See dismissal for operational reasons.

As with any dismissal, you must challenge it within three weeks. See unfair dismissal claims.

Points for Expats

• Residence permit. If your permit is tied to a specific employer or job, a change of employer can matter. Inform the immigration office and check whether your permit needs to be updated.
• Information letter in German. Have it translated quickly, because the one-month deadline applies.

Frequently Asked Questions