In joint-stock company X, the Company Collective Agreement (CCA) concluded in 1995 has been terminated. CCA contains a provision that states “In case this Agreement is terminated or revoked, the existing agreement shall apply until a new agreement is concluded, unless the parties state that they do not intend to enter in a new agreement1“. This step is based on the Constitutional Tribunal ruling of 18 November 20022 which renders this provision unconstitutional.
The terminated CCA has been replaced by the Compensation Regulation and employees received letters of amending termination which introduced new terms and conditions of remuneration in individual employment contracts.
Meanwhile, the local trade union has taken legal action by filing a request under Article 189 of the Civil Procedure Code to assess whether the CCA is still legally binding even if terminated by the employer, and whether it will continue to apply, under its own provisions, until a new collective agreement has been concluded which covers the employees of this company. While reaffirming the legal interest that allows a court suite for such legal action, the trade union made a claim that the failure to attempt amending the said provision since the publication of the said Constitutional Tribunal ruling, even though CCA has been amended multiple times over many years, implies a full and informed acceptance of the contested provision by the employer.
This process will have an impact on the employer that is about to acquire this company. Wherever a collective agreement exists in the acquired company its provision must be respected and enforced in line with Article 2418 of the Labour Code, which stipulates:
“Provisions of a collective agreement covering employees of a company before such company has been acquired in full or in part by a new employer shall apply to such employees for one year since the acquisition, unless otherwise specified in other legislation”.
Moreover, if the case is ruled in favour of the trade union the acquiring employer shall cover the expenses associated with claims, if any, filed by employees whose terms and conditions of remuneration have been modified, pursuant to Article 23¹ of the Labour Code. “Any liabilities arising out of an employment contract concluded before a full or partial acquisition of a company by another employer shall be covered jointly and severally by the former and the new employer3“. In case an entire company (not just a part of it) is acquired) the new employer shall assume all the labour liabilities. Article 23¹ Para. 1 of the Labour Code specifies the succession of labour liabilities and any new acquiring employer must assume such liabilities, including any outstanding employee compensation.
Anyone who considers acquiring a company that employs people will be well advised to assess the financial ramifications of such risks.
- in line with the provisions of Article 2417 Para. 4 of the Labour Code, as it was applicable between 1 January 1995 and 1 January 2001, pursuant to the law of 29 September 1994 on amending the Labour Code and certain other laws (Journal of Laws of 1986 Issue 201)↵
- Document ID K 37/01 (Journal of Laws of 2002 Issue 196 Section 1660)↵
- Article 231 Para. 2 of the Labour Code↵