The rights and obligations for the employer and employee differ depending on whether an asset or share deal is undertaken.
Asset deal
If the employee is being acquired through the sale of assets to a third party, a transfer of ownership of the undertaking is likely. Whenever there is a change of ownership of undertakings, the employees do have rights according to the EU Directive 2005/56/EF, which is implemented in Norwegian Law. Local Norwegian legislation defines clear obligations towards employees in the event of transfer of ownership of undertakings in the Working Environment Act (WEA) of 2005 chapter 16. According to chapter 16, the new and former employer shall inform the employee’s elected representatives and the employees in due time before the merger.
As a minimum, the employees must be informed 14 days before the transfer of undertaking. The employees’ elected representatives should be informed in advance so that the process will allow for minimum discussions and consultation. The information to the employees and employee elected representatives should as a minimum include the following:
– the reason for the transfer;
– the agreed or proposed date for the transfer;
– the legal, economic, and social implications of the transfer for the employees;
– changes in circumstances relating to collective pay agreements;
– measures planned in relation to the employees;
– rights of reservation or preference and the time limit for exercising such rights.
Mandatory legislation does not require negotiations on the mentioned topics, but a minimum of discussions and consultations with the employee elected representatives is required. Special rules related to process, negotiations, consultation and timelines may be laid down in an applicable CBA.
If the previous or new owner is planning measures in relation to their respective employees, such as restructuring/changes of work/positions, terminations etc., they shall consult with the elected representatives as early as possible on the measures with a view to reaching agreement. The timeline must allow for the employees’ elected representative to make appropriate investigations.
As a main rule, the employee is entitled to, and obliged to, be transferred to the new employer if the deal is covered under the EU Directive 2005/56/EF. The individual rights and obligations in the contract of employment on the date of transfer shall be transferred unchanged to the new employer, cf. WEA § 16-2 (1). An employee may object to the transfer of the employment relationship (right of reservation) to the new employer and has a minimum of fourteen days counting from the day that the information regarding the transfer is provided, cf. WEA § 16-3.
Share deal
There is no specific obligation to inform and discuss a share deal with the employees in advance, however, there is a general duty for employers employing more than 50 employees to inform and discuss issues of importance with the employees’ elected representatives. A share deal could represent an issue of importance. The information to the employees’ elected representatives shall be provided “as soon as possible”. According to case law, the consultation should already be done at the stage of planning the change. The employees’ elected representatives should be allowed an “appropriate amount of time” to assess the information, make appropriate investigations and prepare any consultations. Normally some days are needed for submitting invitation to consultation to hold the meeting, up to maximum one week, depending on whether any of the parties are covered under a CBA.
If the employer is covered under a CBA, the CBA may require that the employees’ elected representatives are informed about the transfer of shares immediately after the board has certain knowledge of the transfer, when the change of ownership is above a certain threshold.