Transfer of undertaking is more and more used by companies in their strategies for expanding, changing or restructuring their business. The parties involved in a transfer of undertaking should be aware of and observe the rules regarding the employees protection in case of transfer of undertakings (“TUPE”).

In Romania the employees affected by a transfer of undertaking are protected under the Labour Code and Law no. 67/2006 on the protection of the employees’ rights in case of transfer of undertakings, units or part thereof, which implements the Council Directive 2001/23/EC. 

WHEN TUPE APPLIES

Depending on the specific situation and particularities of the transaction, TUPE may apply in case of:

• transfer of business or parts thereof (e.g. a department, a unit, a division, etc) to a third party;
• transfer of business or parts thereof following merger/de-merger;
• outsourcing: a contractor takes over the activity previously performed in-house by the beneficiary;
• in-sourcing: a beneficiary takes over the activity previously outsourced to a contractor;
• change of the contractor.

TUPE PROTECTION

The main measures for protection of employees in case of transfer of business are:

• the transferor and transferee must inform/consult with the employees’ representatives or their own employees, as the case may be, prior to the transfer date;
• the transferor’s rights and obligations under the employment agreement are transferred by virtue of law to the transferee on the transfer date;
• the transferor’s rights and obligations under the collective bargaining agreement applicable on the transfer date are transferred to the transferee; the latter must observe the provisions of the agreement until it expires or is terminated;
• the employer is responsible for termination of employment agreement in case the transfer involves a substantial amendment of the work conditions detrimental to the employee;
• individual or collective dismissal due to the transfer is forbidden.

INFORMATION AND CONSULTATION

1. Notification on the transferred rights and liabilities

The transferor must notify the transferee prior to the transfer date on all the rights and obligations to be transferred. In practice, such information is made by providing the transferee with copies of the individual employment agreements, of the collective bargaining agreement, if the case, with a list of employees’ benefits, etc.

2. Notification to the employees’ representatives

At least 30 days prior to the transfer date the transferor and the transferee must notify in writing the employees’ representatives, or in lack of the latter, their own employees, inter alia, on the following: 

• the transfer date or the proposed transfer date;
• the reasons for the transfer;
• the legal, economic and social consequences of the transfer for the employees;
• any measures to be taken with respect to the employees;
• work conditions.

Transfer of undertakings can be very disturbing for employees, as it involves, inter alia, the change of the employer; therefore, employers should pay attention to the communication with the employees to avoid unwanted outcomes.

3. Consultation

The transferor and the transferee having at least 20 employees must consult the employees’ representatives in connection with the transfer. 

Irrespective of the number of employees, should the transferor or the transferee envisage measures in connection with its own employees in relation to the transfer, it has the obligation to consult with the employees’ representatives, at least 30 days prior to the transfer date.

The duration of the consultations is not provided by law. However, it should be reasonable in order to allow the employees’ representatives to examine the issue in an adequate matter, to elaborate their point of view, as well as to obtain a justified answer to any point of view which they might raise. In practice, the consultations may take around 1 – 3 weeks. 

The consultations should not be only formal; as such the consultation should take place prior to determining in concrete all the details regarding the employees’ transfer, in order to allow the relevant employees’ representatives to analyze the issue and provide their point o view on the envisaged measures.

DISMISSAL OF EMPLOYEES PRIOR OR AFTER THE TRANSFER

The transferor and the transferee are forbidden to dismiss the employees due to the transfer of undertaking. 

Even if there is a transfer of undertaking, the transferor, or as the case, the transferee, may dispose dismissal measures based on any ground provided by the Romanian Labor Code (e.g. disciplinary reasons, non-performance reasons, reasons not related to the employee etc). However, in case of litigation the employer should be able to prove that such dismissal was decided for grounded reasons and not for facilitating the transfer or in connection thereto.

In case of illegal dismissal the employee may ask in the court: 

• annulment of dismissal decision;
• payment of an indemnity equal to the updated salaries and to the other rights of which the employee would have benefited;
• moral prejudice suffered for the fault of the employer as long as he can prove the prejudice;
• reinstatement to the transferee.

EMPLOYEE REFUSAL TO TRANSFER

The Romanian TUPE law does not require the transferred employee’s approval nor it provides the employee’s right to refuse the transfer.

However, the employee has the possibility to „refuse” the transfer to the new employer by resigning, as the employee has the right to resign at any time, without reason.

Therefore, if an employee does not want to be transferred, he/she can resign without justifying such decision. If the resignation notice period expires after the transfer date, the employee will be transferred to the transferee by virtue of law, but his/her employment agreement will still terminate on expiry of the notice period.

DATA PROTECTION MATTERS

From a data protection perspective, a notification may be necessary to be made to the Romanian Data Protection Authorities, depending on the nature of the data processing to be performed by the employer in connection with the transfer of undertaking.

In case personal data are transferred to countries which are not in EU or EEA or which have not been recognized by the European Commission as offering an adequate level of protection, authorization of the transfer should be obtained from the Romanian Data Protection Authority.

Before a transfer of undertaking occurs, a data flow analysis should be done for determining if a notification and/or authorization procedure is necessary to be performed.

CROSS-BORDER TRANSFER

The Romanian TUPE law provides that it applies in case of transfer of undertaking, unit or parts thereof located on the territory of Romania. Given the generality of this provision, one may argue that the Romanian TUPE law is applicable also in case of cross-border transfers of undertaking, as long as one of the transferring entities has its headquarters located in Romania. 

A cross-border transfer of undertaking from employment perspective would involve certain aspects (e.g. terms of employment, variation of employment terms, applicable law, competent court of law, etc) which are not clearly regulated and may generate various issues, especially when there are differences in local regulations transposing the Council Directive 2001/23/EC.

Ana-Maria Placintescu – October 2017