Employee Rights on Business Transfers
Our partner, Dr. Eman Riad, published an article with Al-Borsa Newspaper regarding the transfer of undertakings and its consequences on the employees under the Egyptian Labor Law.
This Article comes in the wake of the obstacles faced the sale of the National Bank of Greece Egypt to Audi Bank due to employees’ objection and request for severance compensations.
Automatic Transfer of Employees in case of selling the establishment
Dr. Eman explained how Article (9) of the Egyptian Labor Law No. 12/2003 confirms the approach of automatic transfer of employees in cases of transfer of the business for any reason (i.e. merger, acquisition, sale, lease, inheritance … etc). The Labor Law provides additional protection for the employees by deciding the joint liability of the new and older employers in satisfying employees’ rights which were accrued before the transfer of the business.
No redundancy or severance compensation
The Article explained that there is no legal ground for the employees to seek redundancy or severance compensation as a result of selling the business, to the contrary, objecting to the transfer is deemed as resignations by the objecting employees.
No requirement for disclosure of information of consultation
There is also no obligation under Egyptian law to provide information or conduct consultation with the employees or their labor union, this is unlike other jurisdictions (i.e. TUPE in the UK).
Practical difficulties in applying the automatic transfer
Finally, the article addressed the practical difficulties which hinder the automatic transfer of the employees in Egypt due to the requirement made by the Social Insurance Authority requesting the employees to sign resignations and new employment contracts to transfer their social insurance registrations from the old employer to the new employer.
To read the full article click here