Extraordinary transactions

Extraordinary transactions

Last update : 19/04/2022
What does extraordinary transaction mean?

Extraordinary transactions include those operations to reconfigure the organisational structure to adapt it to the company’s changed needs. They include the transfer of a company or a company branch, transformations, mergers and demergers.

From a labour law point of view, such operations are relevant if they entail a change in the organised financial activity ownership.

Last update : 19/04/2022
What does "company transfer" or "company branch transfer" mean when applying labour law provisions?

Art. 2112, paragraph 5) of the Italian Civil Code defines the company transfer as any operation which, following a contractual transfer or merger, results in a change in the ownership of an organised financial activity, whether or not for profit, which existed before the transfer and retains its identity afterwards.

For a company transfer to take place the following elements must exist:

  • the pre-existence of an organised financial activity;
  • the preservation of the financial activity identity following the transfer.

A “company branch” transfer must consist of a functionally autonomous part of the organised financial activity, identified as such by the transferor and transferee at the time of its transfer.

The negotiation transaction underlying the transfer is irrelevant to identifying whether or not it is a transfer of a company or company branch as it may consist of:

  • a contractual transfer;
  • usufruct;
  • business leasing;
  • company merger by incorporation or demerger;
  • hereditary succession based on a will and the rules on legitimate succession (Court of Cassation, ruling no. 17418/2005)
  • Merger by acquisition (Court of Cassation, ruling no. 10614/2011 and Court of Cassation, ruling no. 1900/2010).
Last update : 19/04/2022
What are the effects of a company or company branch transfer on employment relationships?

The main effect of a company or company branch transfer is the continuation of the employment relationship from the transferor to the transferee. The consent of the transferred worker is not required for this purpose.

The worker is entitled to the retention of rights already accrued with the transferor at the time of the company transfer (e.g., seniority or other rights agreed in the previous individual contract).

The transferee must apply the financial and regulatory conditions provided for by collective agreements of any level applicable at the date of the transfer, until their expiry, unless they are replaced by other collective agreements of the same level applicable to the transferee’s company.

Art. 2112, paragraph 2 of the Italian Civil Code provides for a system of joint and several liabilities between the transferor and transferee for claims accrued by the worker at the time of the transfer.

Last update : 19/04/2022
Can the transfer of a company or company branch constitute grounds for dismissal?

The transfer of a company or company branch cannot be the only reason for dismissing the employees involved in the operation, either for the transferor or transferee. Dismissal based solely on the fact of a transfer is null and void.

However, the transferor and transferee may proceed with any redundancies (individual or collective) when there are reasons provided for by law (technical-productive requirements or corporate restructuring).

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