TRANSFER OF UNDERTAKINGS – a labour and employment law perspective


Transfers of undertakings, businesses or parts of undertakings or businesses from one entity to another, are an effect of the economic evolution at national and EU level, which bring important changes in the structure of a company.

In addition to the administrative implications, the transfer of undertaking in all its forms fundamentally involves employees and their rights.

In such a context, several regulations establish the legal framework of the transfer of an undertaking (i.e., a company), through the lens of respecting and protecting the rights of the employees involved.

Since it is about an institution that is little debated in the public space, in what follows I will try to outline, for the reader’s understanding, the essence and how such transfers affect the employees, but also the rules that the employer (transferor and transferee) must follow.


In domestic law, the implications from a labour or employment perspective for the transfer of an undertaking is regulated by the provisions of art. 173-174 of the Romanian Labor Code and the provisions of Law no. 67/2006 on safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses. At the level of the European Union, the basic regulation is established by Directive 23/2001/CE (directive which was transposed by the aforementioned law no. 67/2006).

Enterprise transfer is defined by Law no. 67/2006, as being – the transfer[1] from the property of the transferor[2] to the property of the transferee of an undertaking, business unit or part of the undertaking or business, as a result of a legal transfer or merger, according to the law, with the purpose of continuing the main or secondary activity, regardless of whether or not it seeks to obtain a profit.

For the purpose of this article, the main effect of the transfer is represented by the transfer of individual employment contracts from the transferor to the transferee. The transfer of employment contracts must take place on the date of the transfer of the enterprise, not on an earlier or later date. It cannot be postponed or postponed even by the will of the parties.

It is important to emphasize that in case of transfer, employees are also transferred with all existing rights and obligations. There will be no need for them to be re-evaluated medically or psychologically as in the case of concluding a new employment contract.


On the date of the transfer, all the rights and obligations of the transferor, arising from the individual employment contracts and from the existing collective labour agreements, shall be fully transferred to the transferee.

Also, art. 6 of Law no. 67/2006 provides that the transferee is informed about all the rights and obligations which are to be transferred; however, failure to comply with this communication does not entitle the transferee to be exempted from observing and ensuring the rights of the employees.

A very important aspect for employers and employees alike, is the fact that the transfer of the company cannot constitute a reason for individual or collective redundancy. Moreover, the transferee has the obligation to comply with the provisions existing at the time of the transfer in the collective labour agreement, until the date of termination or expiration. The clauses of the collective labour contract may be renegotiated, but not earlier than 1 year from the time of the transfer.

However, the dismissal of some employees pursuant to art. 61 of the Romanian Labor Code – for reasons related to the person of the employee – or art. 65 of the Romanian Labor Code – due to the abolition of their workplace as a result of economic difficulties, technological transformations or the reorganization of the activity – is possible. We discussed individual dismissal and employee layoff in previous articles.

It is therefore not possible for the transferee (the new employer) to modify the individual employment contract in any way. They shall be bound by all the obligations prior to the transfer (including those that would exist, by hypothesis, based on special clauses inserted in the contract such as, for example, a confidentiality clause, non-competition clause or a mobility clause etc.). Of course, the employee can refuse the transfer, but the refusal must be expressed, not interpreted or somehow implied.


At least 30 days before the date of the transfer, the transferor and the transferee must inform in writing the representatives of their employees or their employees, regarding:

  1. Date of transfer or date proposed for transfer;
  2. The reasons for the transfer;
  3. The legal, economic and social consequences of the transfer for employees;
  4. The expected measures regarding employees;
  5. Working and employment conditions.

Also, the obligation of the two employers, transferor and transferee, to inform the employee representatives or employees about the transfer, also arises if the decision leading to the transfer is taken by a company that controls the employer, and not by him directly.


We can observe that the institution of the transfer of the enterprise puts the employees in a vulnerable position, so that both domestic and Community law aims to protect their rights by all possible means.

Furthermore, member states are required to transpose European directives and ensure their application and compliance, but member states may at any time apply or adopt laws and administrative acts more favourable to employees, or even promote collective agreements or agreements concluded between social partners more favourable to employees.

What does this high interest in the protection of workers’ rights mean for the employer in the event of a transfer of the company? Well, it means the need for increased attention regarding the analysis, implementation and execution of the transfer, the need for an external specialist consultation for those who follow the smooth running of the process, but also the maintenance of updated information in the field of work, regarding both domestic and international norms .



  • Law no. 67/2006 of March 22, 2006 regarding the protection of employees’ rights in the event of the transfer of the company, unit or parts thereof
  • Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the maintenance of workers’ rights in the event of the transfer of undertakings, establishments or parts of undertakings or establishments

[1] transferor – any natural or legal person who, by reason of a transfer within the meaning of art. 1 of Law no. 67/2006, ceases to be the employer in respect of the undertaking, business or part of the undertaking or business.

[2] transferee – any natural or legal person who, by reason of a transfer within the meaning of art. 1 of Law no. 67/2006, becomes the employer in respect of the undertaking, business or part of the undertaking or business.

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