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Regulation of Employment Relations in Case of Business Entity Transfer

Regulation of Employment Relations in Case of Business Entity Transfer

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On 15 May 2024, the Law of Ukraine “On amendments to the Labour Code of Ukraine on employment relations in case of business entity transfer” entered into force. The new Law establishes additional guarantees to employees in the event of business transfer. The Law aims at approximation of the national legislation to the Transfers of Undertakings Directive 2001/23/EC of 12 March 2001.

The transfer of a business entity means a change of ownership of an entity, its reorganization (merger, acquisition, division, transformation), spin-off, as well as a change of owner/user of property of the individual employer, which property is an organized group of resources, while maintaining the same type of economic activity carried out by the transferor.

The main provisions are as follows:

  • in the event of a transfer of a business entity, the employment relations of employees continue with the transferee;
  • the rights and obligations under employment agreements that existed between the employees and the transferor are transferred to the transferee;
  • the employer is obliged to notify the employees of the transfer of the business entity no later than 10 days before the transfer;
  • the trade union or employees' representatives are entitled to initiate consultations with the transferor and/or transferee within 5 days of receiving the information on the reasons for the transfer and its consequences, as well as measures to minimize the negative impact on employees;
  • in the event of a transfer, the status and functions of a trade union or other representative body of employees remain unchanged;
  • if the transfer of an entity results in changes in the essential working conditions, the employee must be notified no later than 2 months in advance.

By Inesa Letych, Counsel, and Iryna Shaposhnikova, Associate, Asters

Ukraine Knowledge Partner

AVELLUM is a leading Ukrainian full service law firm with a key focus on Finance, Corporate, Dispute Resolution, Tax, and Antitrust.

Our aim is to be the firm of choice for large businesses and financial institutions in respect of their most important and challenging transactions.

We build lasting relationships with our clients and make them feel secure in new uncertain economic and legal realities.

We incorporate the most advanced Western legal techniques and practices into our work. By adding our first-hand knowledge, broad industry experience, and unparalleled level of service we deliver the best results to our clients in their business endeavours. Our partners are taking an active role in every transaction and ensure smooth teamwork.

AVELLUM is recognised as one of the leading law firms in Ukraine by various international and Ukrainian legal editions (Chambers, The Legal500, IFLR1000, The Ukrainian Law Firms, and others).

Firm's website: www.avellum.com


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