What happens to your contract when your company is sold (Article 44)

Key rules

• Your rights: Seniority, pay, contract type and your collective agreement pass to the new owner when a business unit is transferred.
• Dismissal: Being dismissed because of the transfer is unlawful.
• Share sale: If only the company's shares are sold, nothing is transferred and your contract carries on unchanged.
• Insolvency: In an insolvency sale you move to the buyer, but old unpaid debts are not the buyer's responsibility.

What you keep when the business changes hands

If the company, a workplace or a self-contained part of the business is sold, your job moves to the new owner. You keep your seniority, your pay, your type of contract and your Social Security position. Any pension commitments you had also pass across. This is called subrogación.

A sale is not a reason to dismiss you. If you are dismissed because of the transfer, the dismissal is unlawful.

When the rule applies

It applies when a business unit keeps its identity after the change of owner. That means an organised set of assets, staff or both, used for an economic activity. The legal form does not matter: a sale, lease, concession or merger can all count.

In work that depends mainly on people, the new owner taking on a significant part of the staff, in number and skills, can itself count as a transfer.

Your collective agreement

The collective agreement that applied to you keeps applying until it expires or a new agreement takes effect. The exception is where the transferred unit keeps its own autonomy and another agreement replaces it.

Who pays old debts

Seller and buyer are jointly liable for three years for work debts that arose before the transfer and are still unpaid. The same goes for Social Security debts from before the transfer. The three years run from the transfer date. You can claim from either of them.

Debts that arise after the transfer are the buyer's alone. If the transfer is treated as a crime, liability can be wider.

When the rule does not apply

• Selling shares: Your employer is still the same legal entity, so your contract simply continues. Nothing is transferred.
• Selling only machinery or other single assets: If no business unit moves, your contract does not move either.
• Insolvency: If a production unit is sold in insolvency proceedings, employees do move to the buyer. But the buyer is not liable for old debts the insolvent company left unpaid. Those are paid by FOGASA and the insolvency estate. The court can also approve changes to the terms of the transferred contracts.
• Losing a service contract: If a contractor only loses a contract, with no assets or staff changing hands, the law does not move you. Your sector's collective agreement may still require the new contractor to take you on. Check your agreement.

Each case turns on its facts. If you are unsure whether your situation counts as a transfer, ask a labour lawyer or a union before you sign anything. The questions below cover the most common cases.

Frequently asked questions

Does my contract change if the company's shares are sold?

No, a share sale does not change your contract, because your employer stays the same legal entity. The contracts simply continue with no transfer, so the rules for a business sale do not come into play.

Do I move to the buyer if only machinery or other assets are sold?

No, selling individual assets such as machinery does not move your contract to the buyer. Your contract passes only when a whole business, workplace or production unit that keeps its identity changes hands. In work that relies mostly on people, taking over a significant part of the staff can count as a transfer too.

What happens to my contract and unpaid wages if the company is insolvent when it is sold?

If a production unit is sold in insolvency, you still move to the buyer with your contract. The buyer is not liable for debts the insolvent seller left unpaid, which are paid by FOGASA (the state wage guarantee fund) and the insolvency estate.

Can I move to a new company if my employer only loses a service contract?

Possibly, because your sector's collective agreement may require the new contractor to take you on even if no assets or staff were transferred. Check the subrogation clause in your agreement, or ask a union or labour lawyer.