A Business transfer is when a company or parts of the company’s activities are transferred from one company to another, because of an agreement between the companies. It may also be a business transfer, IF outsourcing takes place to another company.
It depends on a specific assessment of how large a part of a company must change owner before the rules on business transfer are discussed.
If a company’s shares are transferred. It is not a business transfer.
In connection with a business transfer, the employees automatically follow the company over to the new owner, on the same terms of employment as before the business transfer.
The employee cannot choose between a dismissal from the employer or to follow, as the transfer of the employment relationship takes place completely automatically. The employee must terminate his position if he does not wish to follow up in connection with the transfer.
Pursuant to the Business Transfer Act, the new owner takes over both rights and obligations that existed at the time of takeover in relation to individual agreements on pay and working conditions. This means that the employees have the same notice of termination, the same salary, etc.
If the employees are dismissed in connection with a business transfer, the employer must be able to document that the dismissal is reasonably justified on financial, technical, or organizational grounds. If this is not the case, the employee may in some cases be entitled to compensation for unfair dismissal.
See the Business Transfer Act here (note that the Act is in Danish):