Classify entry into existing employment relationships.
Review section 3 AVRAG, information under section 3a and collective-agreement effects before preparing new contracts.
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Dismissal on a business transfer: what succession planning must address
Mag. Bernhard Brandauer, Rechtsanwalt
Dismissal on a business transfer: classify employment relationships, information duties and succession measures under AVRAG.
A business succession often changes roles, processes and expectations. It does not automatically end existing employment relationships or require every employee to sign a new contract. Where there is a business transfer, the Austrian AVRAG provides a specific framework that should be reviewed before any dismissal is considered.
This article focuses on dismissals around a transfer. It is not a review of an individual notice. The broader article on a family business transfer explains the wider context.
Quick check
Which employment question comes before dismissal?
The check separates transfer, information and the particular reason for termination.
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Is a business or part of a business actually being continued?
A share transfer is not automatically the same as a business transfer.
All paths at a glance
Overview of all answers.
Separate a share transfer from a business transfer.
A shareholder change does not answer every employment question. Employer status and actual organisation must be established.
Secure the notice and the transfer facts.
Record service, reason, notice period and operational changes. Do not base the review on assumptions.
Separate a business transfer from a share transfer
In a share deal, the GmbH remains the employer while its shareholders change. In a business transfer, another owner may enter the existing employment relationships. The heading of the transfer agreement alone does not determine the classification.
The facts include continuation, assets, functions, organisation and workforce. The articles review covers the corporate side but does not decide the employment analysis.
Review existing employment and the acquirer’s entry
Section 3 AVRAG provides for the acquirer’s entry into employment relationships existing at the time of a business transfer. The personnel file should therefore include contracts, service periods, outstanding claims and applicable collective agreements.
The article on key employees addresses retention and communication. This article asks more narrowly whether a dismissal rests on an independent legal reason or merely on the transfer.
Document information and planned measures
Section 3a AVRAG addresses information on the timing, reason, legal, economic and social consequences of the transfer and planned measures. Information is not a substitute for a dismissal review, but it documents the intended changes.
Where an employee representative body exists, the statutory communication channels must also be considered. The document list should record the workforce structure and planned measures.
Do not give the transfer as the only reason
The statement that the successor wants a different team does not by itself establish a valid dismissal. The employer, reason, notice period, collective agreement and any special protection must be reviewed.
Sections 4 and 6 AVRAG address further consequences of a transfer. A dismissal should therefore not be assessed separately from employment conditions, outstanding claims and acquirer liability.
Common mistakes in dismissal planning
It is wrong to assume that all employees must sign new contracts because a family member takes over. A dismissal whose only visible trigger is the transfer also creates a serious classification issue.
Communication matters as well. Issuing notices before analysing the transfer can produce contradictory statements. A coordinated review of facts, information and measures is safer.
Questions about dismissal on a business transfer
Do employment relationships end automatically when a family member takes over?
No. In a business transfer, the acquirer may enter existing employment relationships. The facts determine the classification.
Can an employee be dismissed during succession?
A dismissal requires its own legal review. The succession alone does not establish whether it is effective.
What information must employees receive?
Section 3a AVRAG addresses timing, reason, legal, economic and social consequences and planned measures. The notice must fit the specific transfer.
Plan succession, keep control, avoid disputes.
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