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Employment Contract Transition

Viimati uuendatud: 02.11.2017

The employment contract may pass over to the legal successor if:

  • The employer, who is a physical person, dies; or
  • The company is transitioned.

Employment Contract Validity if the Employer, who is a Physical Person, Dies

If the employer, who is a physical person, dies, the employment contract shall remain valid and passes over to the descendants – except when the concluded employment contract is largely related to the employer as a physical person (e.g. for providing personal services). In this case, the employment contract shall automatically end with the employer’s death.

If the employment contract passes over to the successors, both the successors and the employee can end the contract under simplified terms in two weeks starting from the time when it was found out, or should have been found out, that the contract was passed over to the successors. When terminating the contract, the employer’s successor must abide by the general notification terms. The employee must notify about the contract cancellation 30 calendar days in advance. The cancellation cause if the employer’s death, but law does not prohibit terminating the contract on other reasons.

Employment Contract Validity if the Company is Transitioned

In a situation where the company continues the same or similar economic activities, also the employment contracts shall be transitioned invariably, including other rights and responsibilities emanating from the employment relationship. For example, the monetary liability agreement with an employee shall automatically pass over to the new employer. Thus, terminating employment contracts with the company transition reason is forbidden. Terminating the contracts for other legal grounds is allowed (e.g. employee’s redundancy in a situation where after the reorganizations there is no more work to give to the employee).

While the company is being transitioned, the employee’s claims are safeguarded through both employers. For example, if a remuneration claim becomes exigible after the company transition, both employers are responsible for its’ execution. This means that the transferor is accountable to the employees in solitude with the acquirer.

During the company transition, both the transferor and the acquirer are obliged to inform and consult with the trustee (or employees, if none exists) and present a notice containing data about the transition (incl. transition date, reasons, results for employees and planned measures). Information must be presented in a written and reproducible form (e.g. by email or in intranet) and duly (employees must have enough time to familiarize themselves with the information). The trustee (or employees, if none exists) must forward their suggestions in 15 days starting from the receipt of the notice, if parties have not agreed on a longer time period.

If the transition requires making changes which influence the situation of employees, the trustee (or employees, if none exists) must be previously consulted with. However, any changes to the employment contracts require previous mutual agreement between the parties.

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