This applies when a business or part of a business is sold (an asset deal). If only the company’s shares change hands (a share deal), your employer stays the same; your contract does not change, but no right to object under § 613a BGB arises either.
Four routes can still lead to a severance payment: a social plan under § 112 BetrVG, the offer under § 1a KSchG in a redundancy dismissal, a termination agreement, or a settlement after an unfair dismissal claim. Which route is open often gets decided within a month of being told about the sale.
The essentials at a glance
- The buyer steps into every right and duty of your employment contract under § 613a para. 1 BGB. You sign nothing new.
- A dismissal because of the transfer is invalid under § 613a para. 4 BGB; dismissals for other reasons remain possible.
- The sale itself creates no entitlement to severance pay. Severance arises through a social plan, § 1a KSchG, a termination agreement, or a settlement after a claim.
- You can object to the transfer in writing within one month (§ 613a para. 6 BGB). Objecting risks a redundancy dismissal from your previous employer.
Company sold: your employment contract transfers to the buyer
Selling a business or part of a business is a transfer of business under § 613a BGB. The buyer takes over the existing employment relationships by operation of law (§ 613a para. 1 sentence 1 BGB). Your salary, length of service, remaining holiday and notice period continue unchanged.
Terms set by collective bargaining agreements or works agreements carry a one-year protection against change: the buyer may not alter them to your disadvantage during that time (§ 613a para. 1 sentence 2 BGB). If a different collective agreement or works agreement already applies at the buyer, though, it can replace the old terms.
This rule is the source of a common myth: a one-year ban on dismissals after a takeover. That is wrong. Only the collective working conditions are protected for a year; whether a dismissal is valid depends on § 613a para. 4 BGB and the Dismissal Protection Act.
Your previous employer stays liable too, for a while. For claims that arose before the transfer and fall due within a year afterwards, the old and the new employer are jointly and severally liable (§ 613a para. 2 BGB).
Can the employer dismiss you because of the sale?
No. A dismissal issued because of the transfer of business is invalid (§ 613a para. 4 sentence 1 BGB). That applies to the previous owner just as much as to the buyer.
Dismissals for other reasons stay permitted (§ 613a para. 4 sentence 2 BGB). If the buyer cuts jobs or closes a site after taking over, a redundancy dismissal becomes a real possibility.
Whether other reasons genuinely applied, or the transfer itself was the motive, is often exactly what gets disputed after a sale. That uncertainty is where your negotiating position comes from. Anyone dismissed around the time of a sale should have it reviewed with an unfair dismissal claim within three weeks (§ 4 sentence 1 KSchG).
Is there a severance payment after a transfer of business?
No statutory entitlement to severance arises from the transfer itself. § 613a BGB protects the continued existence of the employment relationship; it does not provide for a payment. Four routes can still lead to severance after a company sale.
| Route | Requirement | Amount | Deadline or trigger |
|---|---|---|---|
| Social plan (§ 112 BetrVG) | An operational change around the sale, for example job cuts or a site closure; a works council negotiates | Follows the social plan’s formula; enforced before the conciliation board if needed | A planned operational change |
| Severance under § 1a KSchG | Redundancy dismissal with a severance notice in the dismissal letter; you file no claim | 0.5 monthly salaries per year of employment; more than 6 months is rounded up | Let the 3 week claim deadline pass; the entitlement arises when the notice period ends (§ 1a para. 1 KSchG) |
| Termination or settlement agreement | Agreement with the old or the new employer | Freely negotiable | Any time; have it reviewed before signing |
| Settlement in an unfair dismissal claim | Dismissal and claim within 3 weeks (§ 4 sentence 1 KSchG) | A matter of negotiation, depending on the claim’s prospects | 3 weeks from receiving the dismissal |
The Amount column states statutory formulas and negotiation outcomes, not guaranteed sums. What the rule of thumb means in your case, and how much your severance payment can amount to, is covered in its own guide.
A termination agreement can trigger a suspension period for unemployment benefit. Many unfair dismissal claims, by contrast, end in a settlement, where the employer pays severance in exchange for ending the proceedings. How these routes fit together outside a company sale is covered in Severance pay after dismissal: the complete overview.
The right to object under § 613a para. 6 BGB: one month from being informed
Before the transfer, the old or the new employer must inform you in text form: about the timing, the reason, the legal, economic and social consequences, and the planned measures (§ 613a para. 5 BGB).
The deadline starts once you receive this notice. You can object to the transfer in writing within one month, either to the old or to the new employer (§ 613a para. 6 BGB). After an objection, your employment relationship continues with your previous employer.
The deadline only starts once the notice is complete and correct. If it lacks even a brief statement of the reason, for instance, the one-month period does not begin (BAG, judgment of 23 July 2009, case 8 AZR 538/08).
Not every error extends the deadline. Errors that had no bearing on your decision to object do not stop the deadline from starting; the notice does not have to amount to legal advice (BAG, judgment of 21 March 2024, case 2 AZR 79/23).
Anyone who keeps working without objecting for a long time despite a faulty notice can also forfeit the right to object (BAG, judgment of 24 August 2017, case 8 AZR 265/16).
The risk after objecting: dismissal from your previous employer
After objecting, you remain with an employer who has just sold their business. If your job no longer exists there, a redundancy dismissal becomes a real risk.
Anyone who objects is included in the social selection and can challenge a flawed selection. Since 1 January 2004, though, the reasons behind the objection play no part in it; even a well founded reason for objecting does not improve your position in the social selection (BAG, judgment of 31 May 2007, case 2 AZR 276/06).
Whether objecting pays off depends on whether work remains with the old employer and what a social plan there provides. That assessment has to happen within the one month deadline. After that, the choice is made.
Resigning, a new contract, a termination agreement: your options after the sale
Anyone who resigns out of uncertainty usually gives up any severance payment and risks a suspension period for unemployment benefit. The few exceptions are covered in Severance pay after resigning yourself (currently available in German only).
If the buyer presents a new employment contract, have it reviewed before signing. A new contract can carry worse terms and undercut the protection that § 613a BGB gives your existing contract automatically.
The same goes for offers of a mutual separation before or after the sale. Have your termination agreement reviewed before you sign it; once signed, it is binding.
Frequently asked questions about a company sale and severance pay
Can my employment contract simply be changed when the company is sold?
No. The buyer takes over the contract unchanged (§ 613a para. 1 sentence 1 BGB). Terms set by collective bargaining or a works agreement may not be changed to your disadvantage for one year (§ 613a para. 1 sentence 2 BGB); a different collective agreement or works agreement already in force at the buyer can, however, replace them.
Am I entitled to severance pay when the company is sold?
The sale itself creates no entitlement. Severance arises through a social plan (§ 112 BetrVG), the offer under § 1a KSchG in a redundancy dismissal, a termination agreement, or a settlement after an unfair dismissal claim.
How long do I have to object to the transfer of business?
One month from receiving proper notice, in writing, to the old or the new employer (§ 613a para. 6 BGB). If the notice was faulty, the deadline does not start (BAG, judgment of 23 July 2009, case 8 AZR 538/08); errors with no bearing on your decision to object, however, let the deadline run (BAG, judgment of 21 March 2024, case 2 AZR 79/23).
What happens if I object to the transfer?
The employment relationship stays with the old employer. If your job disappears there, a redundancy dismissal threatens; the reasons for your objection play no part in the social selection (BAG, judgment of 31 May 2007, case 2 AZR 276/06).
Can the new owner dismiss me after taking over?
Not because of the transfer itself (§ 613a para. 4 sentence 1 BGB). For other reasons, such as a restructuring with job cuts, a dismissal remains possible; it should be reviewed with an unfair dismissal claim within the 3 week deadline of § 4 sentence 1 KSchG.
