Transfer of the Company or Establishment 

November, 2003 - Cláudia Varela

The system applicable to the transfer of a company or part thereof set forth in Articles 318 to 321 of the Labour Code is aimed at rendering this system compatible with Community Law, notably with Council Directive of 12 March 2001, which focuses on this issue on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of companies or establishments. Where the system currently in force (Article 37 of the Employment Contract Law) is concerned, the Labour Code has maintained the rule whereby the employer’s contractual position in employment contracts entered into with its employees is transferred to the transferee of a company or establishment (or part of any such company or establishment forming an independent unit), regardless of the form any such transfer may take, unless such employees have been transferred by the transferor to another establishment or economic unit at a time prior to the transfer, in which case they will continue to be in the latter’s employ. To be noted however, is that in situations of reversion in the operation of the company, establishment or unit, these will thenceforth be expressly subject to the legal system governing company transfers. As regards liability for employee credits, the Labour Code establishes the period of one year as of the transfer, during which the transferor is jointly liable for obligations having matured until the date of the transfer. In turn, the transferee may post a notice in the workplace informing the employees that they must claim their credits within three months, failing which these will not be transferred to them. An innovative feature of this system is the establishment of the requirement of the transferor and the transferee informing the employees’ representatives, or should there be none, the employees themselves, in writing, of the date and reasons for the transfer, its legal, economic and social consequences for the employees and the measures planned for them. This information must be given in writing and sufficiently in advance of the transfer and, where applicable, no less than 10 days before consulting the employees’ representatives, in order to reach an agreement on the arrangements they propose should be made for the employees in reason of the transfer. Cláudia Varela ([email protected])



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