Transfer of undertaking in Italy:

Under Italian law, a transfer of undertaking could be defined as any operation which, through “a transfer of contract or a merger” transfers the ownership of an undertaking or of a part of an undertaking, “regardless of the type of legal procedure or legal act this transfer is put into effect by, including the hypothesis of usufruct or lease of the undertaking“.

Section 5 of Article 2112 of the Italian Civil Code defines an undertaking as “an organized economic activity, with or without the aim of profit, which existed before the transfer and which keeps its own identity during the transfer” and a part of an undertaking as “a functional independent division of an organized economic activity, identified by the transferor and the transferee at the moment of the transfer“.

The existence of a transfer of an undertaking produces two main effects.

The first is the obligation to follow a procedure of information and consultation of the unions before achieving the transfer and the second is the consequences that the transfer produces regarding the employment contracts.

The procedure is provided by article 47 of Law no 428 of December 29, 1990, as modified by Legislative Decree no. 18 of February 2, 2001.

The Law provides an obligation of consultation and information towards the Work Council and the Unions in regards to Companies with more than fifteen employees, including executives, whose employers intend to proceed with a transfer of an undertaking – either as a whole body or as a branch – the transferor and the transferee must give written notice – at least 25 days before the signing of the act which stipulates the transfer, or before any binding agreement has been reached by the parties.

Second effect is that section 1 Article 2112 of the Italian Civil Code states that the employees who are employed at the time of the transfer, automatically become the employees of the transferee from the time of the transfer under the terms and conditions of employment they previously held with their former employer. As the transfer is automatic, neither the consent of the employees is necessary nor the transferee can refuse to take an employee included in the transferred undertaking. So the employee can bring a case against the transferee, claming for his right to be transferred to the transferee.

In the event that the transferor and the transferee do not respect the procedure provided by the law for transfer of an undertaking or of a part of an undertaking, they could be subject to legal action, as per art. 28 of Act no. 300 of May 20 1970 (known as Worker’s Statute), for anti-trade union behavior.