New regulation on employee participation in companies after cross-border transformations or mergers

As of September 15, 2023, new regulations have come into effect, determining forms of employee participation in a company created as a result of cross-border transformations, mergers, or divisions of companies.

This affects the Act of May 26, 2023, on employee participation in a company created as a result of cross-border transformations, mergers, or divisions of companies.

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Two models of employee participation

The discussed Act distinguishes between two models of employee participation:

• By appointing a special negotiation team for reaching an agreement on employee participation.
• By applying standard employee participation principles.

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Special negotiation team

A special negotiation team is appointed immediately after the respective corporate body announces the plan for cross-border transformations, mergers, or divisions.

Employees, ex lege, retain the right to designate and choose members of the special negotiation team in the event of the legal entity of the company being transformed, merged, or divided.

It must be noted that this law regulates the creation and operation of the special negotiation team in detail, including elements of the agreement in which it specifies, among other things, the scope and rules of participation.

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Standard employee participation principles

In the case of applying the standard employee participation principles, participation of usually involves a representative team.

According to Article 30 of this Act, in the case of applying the standard employee participation principles, employees have the right to:

• nominate, elect, or recommend members of the supervisory board or board of directors of the company created as a result of cross-border transformations, mergers, or divisions of companies.
• object to the appointment of members of the supervisory board or board of directors of the company created as a result of cross-border transformations, mergers, or divisions of companies,

– in a number corresponding to the highest number of employee representatives on the supervisory board or management board of the company that was transformed, merged, or divided before the registration date of the company created as a result of cross-border transformations, mergers, or divisions of companies.

In contrast to the model of employee participation with the special negotiation team, participation in this case is based on statutory provisions rather than an agreement.

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Special protection against dismissal

According to the introduced regulations, the employer cannot:

• Terminate or dismiss an employment relationship.
• Unilaterally change the terms of employment or remuneration to the disadvantage of an employee

– who is a member of the special negotiation team, a member of the representative team, or a representative of employees on the supervisory board or board of directors of the company created as a result of cross-border transformations, mergers, or divisions of companies, during their term, without the consent of the board representing the employees’ company union council. If an employee is not represented by a company union council, this requires the consent of the local labour inspector who is responsible for the employer’s registered office.

Furthermore, a company created as a result of cross-border transformations, mergers, or divisions of companies, within which employee participation exists, is obliged to ensure the protection of employees’ participation rights in the event of subsequent domestic or cross-border transformations, mergers, or divisions for a period of 4 years from the date of the transformation, merger, or division of the companies.

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Criminal liability

Criminal provisions are also regulated in this Act.

In the event of:

• obstructing the establishment and operation of a negotiation team or representative team
• discriminating against a member of the special negotiation team, a member of the representative team, or a representative of employees in the supervisory board or board of directors of the company created as a result of cross-border transformations, mergers, or divisions of companies in associated with their function
• failing to comply with the information duty obligation towards the minister established in Article 54 of this Act

– a person committing such actions is subject to a fine or imprisonment.

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Source: The article was created in collaboration with our cooperation partner – sdzlegal Schindhelm Law Office

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If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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