effect on collective bargaining
If the old employer recognised a trade union for collective bargaining in relation to the employees who are transferred, the new employer must recognise the union to the same extent – but only if the economic entity that is transferred remains distinct from the rest of the new employer’s business. If the new employer inherits union recognition in this way, there is nothing to prevent it derecognising the union, unless the union was recognised by the old employer as a result of the statutory recognition procedure. In that case, the new employer can derecognise the union only by following the statutory procedure for derecognition. (The law on recognising and derecognising a union is summarised elsewhere in the Guide ( Collective bargaining ).)
If the old employer reached any collective agreements with a trade union in relation to the employees who are transferred, the new employer inherits those agreements as they apply to those employees. The new employer can, if it chooses, withdraw from any collective agreements that it inherits, since collective agreements are not in themselves legally binding. However, it will still be bound by any terms of the agreements that are part of employees’ contracts. (An explanation of how collective agreements can be incorporated into individual employees' contracts is explained elsewhere in this Guide (incorporation ).)