Derived from the European Directive 2001/23/EC, the German Company Transition Act (“TUPE”) protects workers in transition. As a starting point, TUPE transfers the employment of the workers concerned from one employer to another under their existing conditions. However, one of the possible consequences of the recent Federal Labour Court decisions on TUPE is that, many years after restructuring and, supposedly, transfers of completed operations, workers can claim permanent employment with their original employer (“contemptuous”) if it turns out that no business transfer has actually taken place. The situation is different when a collective agreement was used in the old company, but not in the new one. In such a case, Paragraph 613a BGB stipulates that the contract applies to the employees of the new undertaking. The restrictions in Paragraph 613b of the BGB in favour of the buyer should not be expected to be relaxed in the near future. If so, the Siemens/BenQ incident has strengthened the hand of those who argue that employee protection should be further strengthened. As a result, buyers should first consider very carefully whether the acquisition is useful for their business. It is then necessary to define the method of acquisition, followed by an agreement with the seller on an acceptable distribution of risks. No general consultation can be given for farm transfers, as each case is different. Transactional documentation of corporate restructurings generally does not offer full contractual protection in this regard.

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