When a business is sold as a going concern, employment protection rules in the EU and the UK move the employees, their terms and much of their history to the buyer automatically, and prevent dismissals because of the transfer. Information and consultation duties apply before completion and failures can be penalised. Outside Europe the rules are different and often less developed, so each country in a carve-out needs its own analysis.
The EU and UK model: automatic transfer
The EU Acquired Rights Directive applies to the transfer of an economic entity that keeps its identity, whether by legal transfer or merger. Employment contracts pass to the transferee, collective agreement terms continue for at least a year in most cases, and the transfer is not in itself a ground for dismissal, though economic, technical or organisational reasons can justify dismissals. Supplementary company pension rights are excluded unless a Member State provides otherwise. Representatives must be informed in good time before the transfer.
The UK keeps this model in TUPE, which also covers service provision changes such as outsourcing. Terms and continuity transfer, the new employer cannot change terms because of the transfer, and pension rights earned to the transfer date are protected though the scheme need not be identical. Employers must inform and consult representatives, with direct consultation allowed since 1 July 2024 for employers with fewer than 50 employees or transfers of fewer than 10, and the seller must give employee information at least 4 weeks before the transfer.12345678910
Germany, France and India
In Germany, section 613a BGB transfers employment relationships to a new owner of a business or part of a business, makes dismissals because of the transfer invalid, and requires written notice to each affected employee covering timing, reasons and consequences. Each employee may object within one month of that notice, which can leave the seller with employees it expected to transfer. In France, article L1224-1 of the Labour Code continues employment contracts with the new employer on a sale, merger or similar change, but the text could not yet be checked.
India brought the Industrial Relations Code, 2020 into force on 21 November 2025. The Code contains a provision on compensation to workers on transfer of an establishment, but its operative text could not yet be checked for this centre. Buyers of Indian businesses should take advice on the current conditions under which transferred workers keep continuity and when compensation becomes payable.111213141516
| Market | Rule | Key protection | Source |
|---|---|---|---|
| EU (all Member States) | Directive 2001/23/EC | Automatic transfer; no dismissal because of the transfer; inform representatives in good time | Directive Articles 1, 3, 4, 7 |
| United Kingdom | TUPE | Terms and continuity transfer; inform and consult; employee information 4 weeks before | GOV.UK |
| Germany | § 613a BGB | Automatic transfer; written notice; one-month right to object | gesetze-im-internet.de |
| France | Labour Code L1224-1 | Contracts continue with new employer (research draft) | Légifrance (not yet checked) |
| India (central) | Industrial Relations Code, 2020 | Compensation provision on transfer of establishment (text not read) | Secondary sources |
Decisions to make
- Is the deal a share sale, a business sale or an outsourcing?1617Automatic transfer rules apply to business transfers and, in the UK, service provision changes; a share sale normally leaves the employer unchanged.
- Does the buyer plan to change terms or reduce headcount after closing?4712Changes and dismissals because of the transfer are restricted; only economic, technical or organisational reasons can justify them.
- Who are the employee representatives, and how long will consultation take?59Information and consultation must happen before the transfer and failures can be penalised.
- What happens to occupational pensions?38The EU Directive excludes supplementary pension schemes by default and the UK protects only rights earned to the transfer date.
Documents usually needed
- Employee census for the transferring business with contracts, collective agreements and benefits
- Employee liability information (UK) and written transfer notices to each employee (Germany)
- Information and consultation plan with representative bodies and timetable
- Pension scheme documents and actuarial position for any supplementary schemes
- Allocation of pre-transfer employment liabilities in the sale agreement
Common mistakes
- Planning post-closing harmonisation of terms that is unlawful because it is caused by the transfer
- Sending German transfer notices that are incomplete, which can extend the employees' period to object
- Starting consultation too late to complete before the target closing date
- Treating supplementary pensions as transferring, or not transferring, without checking national law
- Assuming rules from one EU country apply unchanged in another
Questions businesses ask
Can employees refuse to transfer?
In Germany yes: each employee can object in writing within one month of receiving the transfer notice. UK and other national rules differ and should be checked.13
When must UK employee information be given to the buyer?
At least 4 weeks before the transfer, including recent disciplinary, grievance and claims history.10
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- France: article L1224-1 and the related information duties could not yet be checked on Légifrance; recorded as a research draft.
- India: the operative text of the Industrial Relations Code provision on transfer of establishments could not yet be checked.
- Singapore, the UAE, Saudi Arabia and the United States (federal and state) rules on employees in business transfers were not researched.
- UK compensation amounts for failing to inform and consult were not stated on the GOV.UK pages opened.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
The Acquired Rights Directive applies to any transfer of an undertaking, business or part of one to another employer as a result of a legal transfer or merger, meaning a transfer of an economic entity that retains its identity. Council Directive 2001/23/EC, Article 1(1)(a) and (b). Implemented by each Member State in national law.
Text read on legislation.gov.uk's archive of EU legislation as it stood at the end of 2020; EUR-Lex would not render the full text. Confirm the current consolidated text on EUR-Lex.
Under the Acquired Rights Directive the transferor's rights and obligations under existing employment contracts pass to the transferee, and the transferee must continue to observe collective agreement terms, which Member States may limit to a period of not less than one year. Directive 2001/23/EC, Article 3(1) and 3(3).
Text read on legislation.gov.uk's archive of EU legislation as it stood at the end of 2020; EUR-Lex would not render the full text. Confirm the current consolidated text on EUR-Lex.
Unless Member States provide otherwise, the automatic transfer and collective agreement rules do not apply to employees' rights to old-age, invalidity or survivors' benefits under supplementary company pension schemes outside statutory social security. Directive 2001/23/EC, Article 3(4)(a).
Text read on legislation.gov.uk's archive of EU legislation as it stood at the end of 2020; EUR-Lex would not render the full text. Confirm the current consolidated text on EUR-Lex.
A transfer does not in itself constitute grounds for dismissal by the transferor or transferee, but dismissals for economic, technical or organisational reasons entailing changes in the workforce remain possible. Directive 2001/23/EC, Article 4(1).
Text read on legislation.gov.uk's archive of EU legislation as it stood at the end of 2020; EUR-Lex would not render the full text. Confirm the current consolidated text on EUR-Lex.
The transferor and transferee must inform their employees' representatives in good time before the transfer, and where there are no representatives through no fault of their own, the employees must be informed directly. Directive 2001/23/EC, Article 7(1) and 7(6).
Text read on legislation.gov.uk's archive of EU legislation as it stood at the end of 2020; EUR-Lex would not render the full text. Confirm the current consolidated text on EUR-Lex.
TUPE protects employees in two types of transfer, business transfers and service provision changes, applies whatever the size of the business, and means employees' jobs and terms usually transfer to the new employer with continuity of employment. United Kingdom; the transferring part of the business must be in the UK. Exceptions can apply on redundancy or, in some cases, insolvency. Supplies of goods and single events are not service provision changes.
After a TUPE transfer the new employer cannot change an employee's terms and conditions if the reason is the transfer itself; a change for an economic, technical or organisational reason needs the employee's agreement. United Kingdom.
Company pension rights earned up to a TUPE transfer are protected, but the new employer does not have to keep an identical pension scheme. United Kingdom.
Before a TUPE transfer employers must inform and consult trade union or elected employee representatives, but for transfers on or after 1 July 2024 they may consult employees directly if they have fewer than 50 employees or are transferring fewer than 10 employees. United Kingdom. The page states that employers can be penalised for failing to inform and consult; the amount was not stated.
The transferring employer must give the new employer information about the transferring employees, including disciplinary and grievance history and claims from the last two years, at least 4 weeks before the transfer. United Kingdom; employee liability information.
Where a business or part of a business passes to a new owner by legal transaction, the new owner takes over the rights and obligations of the employment relationships existing at the time of transfer, and terms from collective or works agreements may not be changed to the employees' disadvantage for one year, subject to exceptions. Section 613a(1) BGB.
Dismissal of an employee by the old or new owner because of the transfer of a business is invalid, although dismissal for other reasons remains possible. Section 613a(4) BGB.
Before the transfer the old employer or new owner must inform affected employees in text form of the date, reason, legal, economic and social consequences and planned measures, and each employee may object in writing within one month of receiving that information. Section 613a(5) and (6) BGB. An objection keeps the employment with the old employer.
The effect of an objection (employment stays with the transferor) is the general legal consequence and was not stated in the text read.
Where the employer's legal situation changes, in particular by succession, sale, merger, transformation of the business or incorporation, all employment contracts in force on the date of the change continue between the new employer and the staff. France, Labour Code article L1224-1.
Légifrance could not yet be checked and the search result did not show the article text; the statement and the article identifier need to be confirmed on Légifrance.
The Industrial Relations Code, 2020 was brought into force on 21 November 2025 by notification S.O. 5320(E) of the Ministry of Labour and Employment. Central law.
Secondary report of the notification; the Gazette notification could not yet be checked.
The Industrial Relations Code, 2020 contains a section headed compensation to workers in case of transfer of establishment, in the chapter on lay-off, retrenchment and closure. Central law; section 73 in the Bill as introduced. The operative text and conditions could not yet be checked.
Only the arrangement of sections could be read; the section text and its numbering in the enacted Code need confirmation on India Code.
Questions on this topic
16 statements on employees on a sale, 1 not yet checked against a source
