Employee Transfer Agreements: Everything You Need to Know
Employee transfer agreements allow a company to transfer its employees to another company while keeping the original employment relationship intact.3 min read
Employee transfer agreements allow a company to transfer its employees to another company while keeping the original employment relationship intact.
Because an employee transfer agreement involves two parties, the legal details can get complicated. You'll want a reputable lawyer to help you write the agreement.
Tips on Employee Transfer Agreement – About the Transfer
You'll want your lawyer to be present before you complete the form, which will likely include:
- Employee's name, address, phone number, Social Security number, and ID
- Employee's job title, department, work location, and employment date
- Your own signature
If you need help with employee transfer agreements, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.
Definition of Employee Transfer Agreement
Under an employee transfer agreement, an employer can have its employees work for another company. The employee must give explicit or implicit content, and the original employer (let's call it Employer A) must fulfill its obligations to the employee. With employee consent, these transfers are legal.
In an employee transfer, the employee is essentially acquired by a new employer (we'll call it Employer B) while remaining employed by Employer A. This can be complicated because two separate employers are technically sharing the employee. Having a business plan can help.
Here's how it works:
- The employee remains legally employed by Employer A. That means Employer A must pay wages and benefits (excluding illegal overtime).
- Aside from compensation, Employer B acts in Employer A's place.
- Employer B must fulfill the terms of the employment contract between Employer A and the employee.
- Employer B can't terminate the employment contract or change its terms for the worse.
- Employer A is not bound to any terms that weren't in the original employment contract. Any new rights or obligations created during the transfer period apply only to the employee and Employer B.
- Any obligations Employer A had to the employee now extend to Employer B — even if Employer B agreed to pay wages. The only exception is if both employers make a formal agreement about an employee's dismissal (which would be an amendment to the original contract).
Remember, an employee must give his or her consent to the transfer, either explicitly or implicitly. (If an employee simply starts working for Employer B, his or her actions imply agreement to the transfer.)
Employee Transfer Agreement Sample Clauses
In 2006 Intelsat Global Service Corporation agreed to transfer nearly all its employees to Intelsat Corp. A clause in their employee transfer agreement stated that they could amend the agreement from time to time, as long as no amendments would affect the issuer's ability to pay its loans.
An agreement between AFC and STEC in 1999 provides other examples of such clauses. These companies extended their original employee transfer agreement because STEC wanted to keep the deputy general manager for three more months to ensure a smooth management transition. This manager's work assignments would include training his or her replacement.
The agreement between these two companies included a clause stating that if the manager's replacement wasn't trained within the expected three months, the agreement could be extended — as long as all parties agreed and AFC had enough staff.
An employee transfer agreement may also include clauses such as the following:
- The sellers have not breached any representation or warranty (as far as the buyers know), and the buyers do not know of anything that would excuse them from fulfilling their obligations.
- The buyers, and anyone they designate, have the authority to carry out both the Employee Transfer Agreement and the Assignment and Assumption Agreement. They are also to fulfill its obligations — as long as all the approvals outlined in Schedule 3 are received.
Employment Relationship with Transferred Employee Despite Transfer Agreement – Employment Law - Germany
If two employers make a services framework agreement allowing for the transfer of an employee, two conditions would allow Employer B to establish an employment relationship with the new employee:
- Employer A didn't have the legal authority to transfer employees in the first place, and
- Employer B has integrated the employee into its business.
If both conditions are met, the new employer can establish an employment relationship with the employee.
Temporary Provision of Labor
Hiring temp employees is a flexible staffing method that helps companies limit their financial risks. An employer can loan employees to another business temporarily. In this scenario, the temporary employee is active in the other business but still remains employed by his original employer.