LEGAL SUCCESSION IN LABOUR RELATIONS

29/05/2024

On May 15, 2024, a significant modernization in labour law inforced by the Law of Ukraine No. 3677-IX, adopted by the Verkhovna Rada of Ukraine. This law aims to align national labor legislation with the provisions of Council Directive No. 2001/23/EC dated March 11, 2001, which focuses on safeguarding employees' rights during transfers of undertakings, businesses, or parts thereof, and establishes the employer's obligation to notify employees of any change in the owner of the company.

Context of the Law: The law clarifies the definition and procedure of legal succession in labour relations, ensuring continuity of employment for employees.

Notion of the Legal Succession in Labour Relations:

• Continuation of Labour Relations: Applies in the event of a change in the owner of an company, institution, organization, reorganization of an enterprise, institution, organization (merger, acquisition, transformation, spin-off);
• Individual Employers: Legal succession is recornized between employees and an individuals who use hired labour, ensuring continuity of labour relations with employees in the event of a change in the owner of the property or its parts.

1. Modernized aspects of the law: Transfer of Rights and Obligations: When a business entity is transferred, the alienator transfers their rights and obligations to the acquirer, ensuring the continuation of the employment with the acquirer;
2. Preservation of Trade Union Status: In the event of a transfer, the status and functions of the elected body of the primary trade union organization are preserved under the same conditions as existed before the transfer;
3. Obligations During Transfer: The alienator and acquirer must inform the elected body of the primary trade union organization in writing or via electronic communication no later than 10 business days before the transfer. The notice must include:

• the date or approximate date of the transfer of the business entity; the reasons for the transfer of the business entity;
• legal, economic and social consequences of the transfer of the business entity for employees; any measures envisaged in relation to employees;
• about changes in essential working conditions caused by the transfer of the business entity (the employees must be notified no later than 2 months in advance).

Outcome of the Law. The implementation of the Law imposes additional obligations on employers to maintain employment for employees in the event of layoffs and expands the  concept of legal succession in labour relations. Business actors should be aware that meticulous planning for the business transfers is highly important. To be better positioned in a dynamic global market, it is essential for employers to prioritize due diligence and transparent communication with employees to support them effectively.

 

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