Outsourcing: legal requirements
Outsourcing means that certain tasks, a specific business process or an entire department is outsourced to an external company. What should Outsourcing be contractually regulated? What must be observed under labour law?
There are a number of conceivable reasons for outsourcing certain areas of work from the company, for example:
- Desire for more efficiency in internal processes
- Concentration on core business tasks
- Relief for your own staff
- Lack of expertise in your own company
In general, a distinction must be made between these two forms of Outsourcing to distinguish:
- Variant 1: A specific area of responsibility is outsourced to an external company without the company's own employees or resources being outsourced.
- Variant 2: An area of responsibility or a department, including personnel, is outsourced to an external company.
Variant 1: Outsourcing of a specific task area without outsourcing personnel
An example: The payroll accounting area is outsourced to an external service provider without the company's own employees being transferred to the external company.
From a legal point of view, this variant is primarily concerned with Service contract with the external company legally secure to be designed. The outsourcing agreement should contain provisions on the following points in particular:
- Responsibilities of the external service provider
- Pricing
- Term of the contract
- Liability and limitations of liability
- Regulations on data protection and data security
- Modalities of contract termination
This type of outsourcing can become relevant under labour law if internal jobs are lost as a result of the outsourcing measure. According to the case law of the Federal Labour Court, an outsourcing measure can justify dismissals for operational reasons - even if the restructuring is not necessarily economically necessary or advantageous.
However, outsourcing companies should bear in mind that there are still a number of legal hurdles in the event of redundancies for operational reasons. Therefore, the Preservation of jobs and the Avoidance of redundancies for operational reasons should always be the goal and - if at all possible - take priority when making business decisions.
Variant 2: Outsourcing with outsourcing of personnel
An example: A company's IT department is outsourced to an external company. All employees in the department are transferred to the external company.
As a rule, this variant represents a Transfer of business pursuant to 613a BGB represents. A transfer of business can also occur if only a part of the business is outsourced. In accordance with Section 613a (1) BGB, the new employer assumes the rights and obligations arising from the existing employment relationships in the event of a transfer of business. In other words, the employment relationships affected by the outsourcing are transferred to the new company owner.
In terms of labour law, the following points in particular must be observed in the event of a transfer of business:
1. termination due to transfer of business is prohibited
If an employee is dismissed due to a transfer of business, this dismissal is invalid. Neither the previous employer nor the new company owner may use the transfer of business as a reason to give notice of termination.
2. obligation to inform the employees concerned
Either the previous employer or the new business owner must inform the affected Employees about the following points in text form in advance:
- the (planned) date of the transfer of the business
- the reason for the transfer of the business
- the legal, economic and social consequences of the transfer of the business for the employees
- the measures planned with regard to employees
Employers should take this duty to inform very seriously. If an employer does not fulfil this obligation or does not fulfil it completely, the employees concerned can claim compensation if they have suffered damage as a result of the incorrect information.
3. possibility of objection by the employee
If an employee who is affected by a transfer of business does not agree with their transfer, they can object to it. They have the option of lodging an objection in writing within one month of receiving the information from the employer - either to the previous employer or to the new company owner.
Do you intend to outsource a work area from your company? We from Zeitarbeit International are happy to support you, for example with outsourcing to Eastern Europe: Poland, Czech Republic, Slovakia.