Termination of employer with legal successor

According to Section 69, Paragraph 3 of the Commercial Code: “A merger (zlúčenie) is a procedure in which, based on dissolution without liquidation, one company or several companies cease to exist, while the assets of the dissolving companies pass to another already existing company, which thereby becomes the legal successor of the dissolving companies. An amalgamation (splynutie) is a procedure in which, based on dissolution without liquidation, two or more companies cease to exist, while the assets of the dissolving companies pass to another newly established company, which by its creation becomes the legal successor of the dissolving companies.”

If the dissolution of the commercial company—the employer—occurs as a result of a merger or amalgamation with another company, it would in both cases be a dissolution with a legal successor. The rights and obligations of the employer would therefore pass to the legal successor, and the employment relationships of individual employees would continue to exist.

According to Section 29 of the Labor Code: “The employer is obliged, at the latest one month before the transfer of rights and obligations from employment relations occurs, to inform in writing the employee representatives, and if no employee representatives operate at the employer, directly the employees about:

• the date or proposed date of the transfer

• the reasons for the transfer

• the labor-law, economic, and social consequences of the transfer for the employees

• planned measures of the transfer relating to the employees

The employer is obliged, with the aim of reaching an agreement at the latest one month before implementing measures relating to the employees, to discuss these measures with the employee representatives,” while the obligations also apply to the taking-over employer.

Employee consent is required within the meaning of Section 29a of the Labor Code in the event that, as a result of such changes, the employee’s working conditions are to be fundamentally changed. If the employee does not agree with the changed working conditions, the employment relationship would be considered terminated as of the date of transfer by agreement for reasons of redundancy, regarding which the employer is obliged to issue a written document to the employee, and the employee’s entitlement to severance pay arises according to the duration of the employment relationship.

According to the Labor Code, an entitlement to severance pay arises for an employee with whom the employer terminates the employment relationship by notice for the reason that:

• the employer or a part thereof is dissolved

• the employer or a part thereof is relocated and the employee does not agree with the change of the agreed place of work performance

• the employee becomes redundant due to a written decision of the employer or the relevant body on a change in its tasks, technical equipment, or a reduction in the number of employees with the aim of ensuring work efficiency or other organizational changes

• in the case of an employer that is a temporary employment agency, also if the employee becomes redundant due to the termination of a temporary assignment before the expiration of the period for which the fixed-term employment was agreed

and for an employee with whom the employer terminates the employment relationship by agreement for the reason that:

• the employer or a part thereof is dissolved,

• the employer or a part thereof is relocated and the employee does not agree with the change of the agreed place of work performance,

• the employee has lost, due to their health condition according to a medical opinion, the long-term capacity to perform their previous work.

To determine the amount of severance pay, it is necessary to take into account how long the employee’s employment relationship with the employer lasted.

In the event that bankruptcy is declared against the employer, we also draw attention to the provision of Section 56 of the Act on Bankruptcy and Restructuring, according to which: “By the declaration of bankruptcy, the authorization to act for the bankrupt party in labor-law relations with respect to the bankrupt party’s employees passes to the trustee. The trustee has the authorization according to the first sentence even when acting for the bankrupt party in labor-law relations with respect to the bankrupt party’s employees according to a special regulation (note: the Social Insurance Act).”

According to Section 27, Paragraph 1 of the Labor Code: “If an employer who has a legal successor is dissolved, the rights and obligations from labor-law relations pass to this successor, unless a special regulation provides otherwise.”

This means that employment contracts do not expire, but the rights and obligations from these employment contracts pass to the legal successor as the employer.

At the same time, we draw attention to Section 29, Paragraph 1 of the Labor Code, according to which: “The employer is obliged, at the latest one month before the transfer of rights and obligations from labor-law relations occurs, to inform in writing the employee representatives, and if no employee representatives operate at the employer, directly the employees about:

• the date or proposed date of the transfer

• the reasons for the transfer

• the labor-law, economic, and social consequences of the transfer for the employees

• planned measures of the transfer relating to the employees”