What Are the TUPE Rules in Germany? Buyer Obligations Under § 613a BGB, Information Duties, Employee Objections and Dismissal Risks

Understanding what are the TUPE rules in Germany is essential for any buyer, private equity sponsor or in-house counsel structuring an acquisition, carve-out or outsourcing transaction that touches a German workforce. Germany does not use the term “TUPE”, instead, § 613a of the Bürgerliches Gesetzbuch (BGB) governs the automatic transfer of employment relationships whenever a business or an identifiable part of a business changes hands. The provision is mandatory law, meaning it cannot be contracted around in the share purchase agreement or waived by employees in advance. With hybrid and remote working arrangements adding new complexity to the economic-entity analysis, deal teams entering the German market in 2026 face heightened scrutiny from labour courts and works councils alike.

In practical terms, § 613a BGB imposes four core obligations on acquirers:

• Automatic succession. All employment relationships tied to the transferred economic entity pass to the buyer by operation of law, no employee consent is needed.
• Mandatory information duty. Affected employees must receive a detailed written information letter before the transfer, covering the reason for and legal, economic and social consequences of the change.
• Employee objection right. Each employee may object to the transfer within one month of receiving a compliant information letter, and the one-month clock does not start if the letter is defective.
• Dismissal protection. Any termination carried out because of the transfer is void, although ordinary operational redundancies may still be lawful if they meet strict procedural requirements.

Overview of § 613a BGB, the TUPE-Equivalent Legal Framework in Germany

Section 613a BGB is the central German statute on transfer of undertakings. It was originally introduced into the Civil Code in 1972 and has been refined through decades of case law by the Bundesarbeitsgericht (BAG), Germany’s Federal Labour Court. The provision implements the European Union’s Acquired Rights Directive (Council Directive 2001/23/EC) at national level, ensuring that employees are not prejudiced solely because the identity of their employer changes as a result of a business transfer.

Statutory text, quick read

§ 613a(1) BGB provides, in substance, that where a business or part of a business (Betrieb oder Betriebsteil) is transferred to a new owner by legal transaction (Rechtsgeschäft), the new owner steps into the rights and obligations arising from the employment relationships existing at the time of the transfer. In addition, the former and new employers are jointly and severally liable for obligations that arose before the transfer and fall due within one year after it. The full statutory text is published by the Federal Ministry of Justice on Gesetze im Internet.

EU Directive and cross-border relevance

Council Directive 2001/23/EC, commonly called the Acquired Rights Directive or the Transfer of Undertakings Directive, obliges all EU member states to protect employees when a business is transferred. The Directive defines a transfer as the transfer of an “economic entity which retains its identity,” a formulation adopted almost verbatim by the BAG when applying § 613a BGB. For cross-border buyers, the critical point is that the Directive sets a floor, not a ceiling: German law may (and in several respects does) go further than the minimum EU standard. Any acquirer structuring a pan-European carve-out should therefore map the German § 613a requirements separately from those in other jurisdictions.

Buyer Obligations Under § 613a BGB, Who Is Liable and When

Whether TUPE in Germany is triggered depends on the deal structure. The rules apply differently across share sales, asset deals and outsourcing transactions.

Share sale vs asset sale vs outsourcing, key distinctions

In a share sale, the target company remains the employer; the legal identity of the employing entity does not change. § 613a BGB is therefore not directly triggered. Nevertheless, the buyer inherits all employment-related liabilities indirectly, because it now owns the company that bears them. Due diligence must still cover collective agreements, pending labour court claims and severance exposure.

In an asset sale (Unternehmenskauf im Wege des Asset Deals), the buyer acquires specific assets, contracts and business functions. If those assets constitute an “economic entity”, defined by the BAG as an organised grouping of resources that pursues a specific economic activity, all employment relationships assigned to that entity transfer automatically to the buyer. The BAG assesses this through a multi-factor test looking at whether tangible or intangible assets were transferred, whether the majority of the workforce was taken over, whether customers or suppliers followed the transaction, the degree of similarity between pre- and post-transfer activities, and the duration of any interruption.

In outsourcing and service-contract transfers, the outcome is fact-specific. An outsourcing transfer of operations in Germany can trigger § 613a even where no physical assets change hands, provided the workforce and the organisational function it performs are substantially taken over by the new service provider. Conversely, a pure supply-of-goods contract or a one-off project engagement will normally fall outside § 613a.

Practical employment due diligence checklist

Before signing, the buyer’s deal team should examine:

• Current payroll data, including bonus and benefit entitlements, accrued holiday and overtime accounts.
• Collective bargaining agreements (Tarifverträge) and works agreements (Betriebsvereinbarungen) that bind the transferring entity.
• Works council composition, election cycle and any pending consultation processes.
• Ongoing or threatened employment litigation (unfair dismissal, discrimination, equal-pay claims).
• Fixed-term contracts, secondment arrangements and employees on parental leave or long-term sick leave.
• Any prior § 613a transfers (successive transfers can create cumulative liability).

In the SPA, buyers typically negotiate employment-specific representations and warranties, a pre-transfer indemnity for undisclosed liabilities, escrow or retention mechanisms sized to estimated severance exposure, and an obligation on the seller to cooperate with the § 613a information process.

Employee Information Letter Under § 613a BGB, Timing, Content and Sample Template

§ 613a(5) BGB requires the former employer or the new employer to inform each affected employee in writing about the transfer before it takes effect. In practice, seller and buyer typically coordinate on a joint or coordinated employee information letter because any deficiency in the letter has serious consequences: the employee’s one-month objection period does not begin to run until a compliant letter has been received.

Required content of a § 613a information letter

The BAG has developed detailed requirements, drawn from § 613a(5) BGB, for the content of the information letter. A compliant letter must address each of the following points:

• Date or planned date of the transfer.
• Reason for the transfer (e.g., asset purchase, outsourcing, reorganisation).
• Legal consequences of the transfer for the employees, specifically, that employment relationships transfer automatically and on what terms.
• Economic consequences, impact on the employee’s role, location, reporting line and any planned restructuring measures.
• Social consequences, effects on pension entitlements, bonus schemes, social plans or collective agreements.
• Measures envisaged with respect to the employees (planned redundancies, relocations, changes to working conditions).
• Identity of the new employer, legal name, registered address and, where relevant, group affiliation.
• Right to object and the one-month deadline for exercising it, together with the address to which the objection should be sent.

Sample employee information letter, editable template

The template below can be adapted for most asset-deal scenarios. It should be reviewed by qualified German employment counsel before use.

Note: This template is for informational purposes and does not constitute legal advice. Deal-specific adjustments, particularly around collective agreements, pension obligations and planned restructuring measures, are essential.

Employee Objections to a Transfer of Undertakings in Germany, the One-Month Rule

Under § 613a(6) BGB, every affected employee has the right to object to the transfer of their employment relationship. The objection must be made in writing and addressed to either the former or the new employer. The statutory period is one month from receipt of a compliant information letter. This is a critical point for deal teams: if the information letter is deficient in any material respect, the one-month period never begins, and the employee right to object one month in Germany effectively remains open indefinitely, a position confirmed by the BAG in settled case law.

When an employee objects, their employment does not transfer. Instead, the employment relationship remains with the seller. The practical consequence is that the seller may face an obligation to continue employing individuals for whom it no longer has a role, while the buyer loses headcount it expected to acquire. Either outcome can disrupt post-closing integration plans.

Practical checklist when employees object

• SPA contingency. Include a mechanism, such as a purchase-price adjustment, closing condition or specific indemnity, that addresses the risk of key-person objections.
• Retention measures. Where critical employees are identified pre-signing, consider offering retention bonuses or improved terms (subject to equal-treatment obligations).
• Operational redundancy. If the seller genuinely has no role for an objecting employee post-transfer, it may terminate for operational reasons, but must follow full works-council consultation and social-selection requirements.
• Re-hiring. In some cases, the buyer may offer the objecting employee a new contract on agreed terms, although this must be handled carefully to avoid allegations of a sham transfer.

Dismissal Risks and Remedies, What Is Void and What Is Permitted

§ 613a(4) BGB states unequivocally that a dismissal “by reason of” the transfer of a business (wegen des Betriebsübergangs) is void. This applies to dismissals by both the former and the new employer. The provision creates one of the strongest forms of dismissal protection in German employment law and is a key reason why the TUPE rules in Germany demand careful advance planning.

A dismissal is considered to be “by reason of the transfer” if the transfer is the dominant motive. This includes terminations timed to reduce headcount before closing in order to make the deal more attractive, as well as post-closing dismissals where the sole justification is the change of employer.

However, § 613a(4) BGB does not prohibit all post-transfer dismissals. Ordinary operational redundancies (betriebsbedingte Kündigungen) remain lawful provided they are based on a genuine, independent business reason, such as a site closure, reorganisation or elimination of a function, and meet the procedural requirements of the Kündigungsschutzgesetz (KSchG), including proper social selection and prior works council consultation under § 102 of the Works Constitution Act (BetrVG).

Remedies available to employees

An employee who believes they have been dismissed in violation of § 613a(4) BGB must file a claim with the competent labour court (Arbeitsgericht) within three weeks of receiving the written notice of termination. If the court finds the dismissal void, the primary remedy is reinstatement, the employment relationship is deemed never to have ended, and back pay is owed. In practice, many cases settle through a negotiated severance payment, but the buyer should budget for reinstatement risk when modelling post-acquisition costs.

Works Council Consultation, Collective Agreements and GDPR in Cross-Border M&A

Works council consultation in M&A in Germany is a separate but closely related obligation. Where a works council (Betriebsrat) exists at the transferring entity, § 111 BetrVG requires the employer to inform and consult the works council in good time about any planned operational change, which includes a transfer of undertakings. The works council does not have a veto right over the transfer itself, but it can negotiate a social plan (Sozialplan) covering severance, redeployment or other compensatory measures.

Practical negotiation points with works council

• Engage the works council early, ideally before signing, to avoid delays at closing.
• Prepare a clear presentation setting out the commercial rationale, the planned timeline and any envisaged workforce measures.
• If a reconciliation of interests (Interessenausgleich) is sought, allow adequate time for negotiation; failure to attempt one can trigger additional compensation claims.
• Coordinate works council notifications with the § 613a employee information letter, timing mismatches are a frequent source of procedural error.

Collective bargaining agreements (Tarifverträge) that applied to the transferring entity continue to apply to transferred employees under § 613a(1) sentence 2 BGB and may not be altered to the detriment of employees for at least one year following the transfer, unless a new collective agreement of equivalent scope replaces them.

On data protection, buyers acquiring employee personal data must ensure compliance with the GDPR and the German Federal Data Protection Act (BDSG). A data-processing agreement or a legitimate-interest assessment should be prepared before employee records are shared during due diligence, and a privacy notice should be issued to transferred employees at closing.

Cross-Border Transfers, Remote and Hybrid Employees and 2026 Developments

The growing prevalence of remote and hybrid work arrangements has introduced additional complexity to the TUPE rules in Germany. Where employees are contractually assigned to a German entity but work physically from another jurisdiction, the § 613a analysis must focus on whether they are organisationally integrated into the transferring economic entity, not merely on their physical location. Industry observers expect German labour courts to refine the economic-entity test further as cross-border remote-work patterns become more common.

For buyers in 2026, the practical implications are threefold. First, place-of-work clauses in employment contracts should be reviewed during due diligence to determine whether remote employees fall within the scope of the transferring unit. Second, tax and social-security split obligations may arise when employees working abroad transfer to a new German employer. Third, early indications suggest that evolving BAG jurisprudence may increasingly treat digital teams as cohesive economic entities even where team members are geographically dispersed, provided they share a common management structure, tools and commercial function.

Practical Action Checklist for Deal Teams

• Pre-signing. Map the workforce to the economic entity; run employment due diligence (payroll, collective agreements, litigation, works council status); identify key persons and objection risk; draft § 613a information letter with seller.
• Signing. Include employment-specific reps, warranties and indemnities in the SPA; set purchase-price adjustment triggers for material employee objections; agree on cooperation obligations for information and consultation processes.
• Between signing and closing. Issue the § 613a information letter; notify and consult the works council under §§ 111–113 BetrVG; finalise the social plan if applicable; prepare GDPR-compliant data transfer.
• Closing. Confirm which employees have transferred; collect and file any objection notices; update payroll, benefits and reporting-line systems.
• Post-closing. Honour existing terms for a minimum of one year; plan any restructuring as a separate, independently justified process; engage the works council on integration measures; monitor the one-year joint-liability window with the seller.

Conclusion

The TUPE rules in Germany, anchored in § 613a BGB and reinforced by decades of Bundesarbeitsgericht case law, create a framework of automatic employee transfer, mandatory information duties, robust objection rights and near-absolute protection against transfer-motivated dismissals. For acquirers, the practical message is clear: employment-law compliance must be integrated into every stage of the deal, from early due diligence through SPA drafting to post-closing integration. Defective information letters, missed works council steps or poorly timed redundancies can expose buyers to open-ended objection periods, void dismissals and significant financial liability.

Deal teams planning a German acquisition, carve-out or outsourcing transaction should engage specialist employment counsel at the earliest opportunity. To connect with a qualified adviser, find a German cross-border M&A lawyer through the Global Law Experts directory.

Sources

1. German Civil Code, § 613a BGB (Gesetze im Internet)
2. Council Directive 2001/23/EC, Acquired Rights Directive (EUR-Lex)
3. Works Constitution Act, BetrVG (Gesetze im Internet)
4. Federal Ministry of Labour and Social Affairs (BMAS)
5. Bundesarbeitsgericht, Official Decisions Database
6. Federal Ministry of Justice, Gesetze im Internet (Statutory Index)