The Notion of 'Employer' in the Situation Of Employing Establishment Takeover

Abstract

The aim of the article is to turn one's attention to the notion of employer in the context of transfer of an employing establishment or its part onto another employer and the possibility to apply functional and pro-union interpretation. According to article 3 of the Labor Code an ”employer” is considered to be every organizational entity, even if it does not possess legal personality, as well as a natural person, if they employ workers. However, in business trading, there exist transactions where the parties are the entities which, on the day of the takeover, do not have the status of an employer as they do not employ workers, and they become the employer exactly as a result of the transfer of an employing establishment or only its part. Therefore, in such a situation there may appear some doubts how to interpret the meaning of ”another employer”, as stated in article 23¹ § 1 LC. It was emphasized in the article that making a solely literal interpretation of this provision, which interpretation in democratic countries occupies a privileged position compared to functional and contextual interpretation, is unjustified in this case. As a result of such an interpretation, entities taking over a given employing establishment or only its part and not employing any worker on the day of the takeover, could intentionally aim to maintain the status of non-employer (i.e. not employ workers), to lead to the exclusion of applying the provisions of article 23¹ § 1 LC in their case. In this situation it is justified to apply functional and pro-union interpretation when constructing this provision. Applying the institution of the takeover of an employing establishment or its part by another employer also covers situations when a new entity taking over an employing establishment or its part, becomes an employer only as a result of taking over workers from the previous employer.