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Date:
26 Sep 2013

a demand for payment of the balance owing under a piece-rate contract fell within the scope of the transferee's obligations under the danish act on employees' rights on transfer of undertakings

By:
Christian K. Clasen

A demand for payment of the balance owing under a piece-rate contract fell within the scope of the transferee's obligations under the Danish Act on Employees' Rights on Transfer of Undertakings

A demand for payment of the balance owing under a piece-rate contract fell within the scope of the ‎transferee’s obligations under the Danish Act on Employees’ Rights on Transfer of Undertakings.‎
 
If a business is sold, the transferee will immediately take over the transferor’s rights and obligations vis-‎á-vis the employees working for the business at the time of the transfer.‎
 
Whether the transferee was also obligated to pay the balance owing to two employees under a piece-‎rate contract which had accrued before the transfer was the question put before an arbitral tribunal in ‎this matter.‎
 
Two weeks after a business transfer, two employees submitted their piecework accounts to their new ‎employer. The two employees believed that the new employer was obligated to pay the balance owing ‎to them under the piece-rate contract.‎
 
The new employer did not accept the accounts submitted by the two employees, arguing that the ‎accounts were of no relevance to it.‎
 
The two employees did not agree and therefore submitted the matter to arbitration, following several ‎attempts at mediation.‎
 
Tribunal decided in favour of the employees
The arbitral tribunal took into account that a transfer had taken place. Since the two employees had ‎continued working for the business after the transfer, the new employer had become a party to the ‎obligation to pay the balance owing to the two employees under the piece-rate contract. However, the ‎amount was reduced since the parties disagreed about the overall number of hours stated in the ‎accounts.‎

 

Norrbom Vinding notes

  • that the decision illustrates that in connection with a business transfer, the new employer will ‎generally become a party to the obligation to pay wages which exists at the time of the transfer. ‎In this case, this obligation also included an obligation to pay the balance owing to the ‎employees under a piece-rate contract.‎