An asset purchase may be negotiated as a deal for equipment, customer contracts and a lease. For the people who operate that business, it may also change the identity of their employer. In Albania that distinction matters before signing: if an economic unit keeps its identity, the Labour Code may carry employment rights and obligations to the incoming operator. The parties should identify the employees and liabilities involved early enough to plan consultation, allocate deal risk and keep payroll running.
Does the transaction transfer an undertaking?
Article 138(1) of the Labour Code looks at whether an undertaking or part of one passes as an organised group of resources that retains its identity and performs an economic activity. The activity may be ancillary. The contract’s heading does not answer that question. Examine what the buyer will actually take over: premises, machinery, systems, customer relationships, work in progress and the team or expertise that makes the activity possible. Consider whether the operation continues after closing and what enables that continuity. No single item on the list is a universal test.
In a straightforward share sale, the company usually remains the same legal employer even though its owners change. A separate transfer of operations after the share sale may require its own analysis. Conversely, an asset deal described as a sale of equipment may have a different character if the incoming party takes over a functioning unit. Temporary assignment of an employee to another employer while the original contract remains in force is a separate situation addressed in Article 137; it should not be used to label a permanent transfer.
What happens to existing contracts and liabilities?
Under Article 138(2), rights and obligations from contracts in force at the point of transfer pass to the transferee when the regime applies. A new employment agreement should not be used to treat the transfer date as the start of service or to wipe out accrued claims. Prepare an employee schedule with start dates, terms, outstanding wages, leave balances and pending disputes. Check actual working arrangements against the signed documents. Recording an item on the schedule does not settle whether it is owed; it identifies what must be reconciled and who will handle it.
The provision also addresses employees who object to a change of employer: they remain linked to the incoming employer until the legal notice period expires. An objection should not be treated as permission to stop paying wages on closing day. Article 138(3) also provides for continuing responsibility of the transferor alongside the transferee within the period specified there. Analyse the applicable notice and individual contract rather than assuming the seller has a clean break or remains liable indefinitely. An indemnity can allocate costs between the parties, but it does not remove rights employees have under the law.
Put information and consultation on the closing calendar
Article 139 requires both parties to inform the recognised union representing the employees or, in its absence, the affected employees. The information covers why the transfer is taking place, its legal, economic and social consequences, and the measures envisaged. Give the information at least 30 days before the transfer and consult on employee measures within that timeframe. A decision made by a controlling entity does not remove the duty. A seller should therefore not assume that a buyer’s group announcement substitutes for the required process.
Draft a timetable backwards from the proposed transfer date. Identify who communicates to which group, which facts are known and what remains open. Record when communications were delivered, the questions raised and the response. Consultation is more useful while proposals can still be examined. If the timetable is too tight, consider moving closing or changing sequencing after checking the legal and operational consequences. A contractual closing date cannot shorten a statutory period. Article 139(4) provides for compensation of up to six monthly wages, in addition to pay during notice, where the employer terminates to the employee’s detriment in breach of these procedures. This is not an automatic payment for every communication defect.
Dismissals and detrimental changes
Article 138(4) makes dismissal because of the transfer invalid. It distinguishes dismissals based on economic, technological or structural grounds requiring changes to employment plans; those must follow the rules in Chapter XIV. Document the real reason, alternatives and applicable process. Where several positions may disappear, assess collective dismissal rules separately. A redundancy list prepared before closing is not a substitute for evidence that the roles will actually cease or for consultation and other requirements that apply.
Article 139/1 addresses a different situation: an employee ends the contract because the transfer involves substantial changes to working conditions to their detriment. The Code treats that as unjustified termination by the employer and requires written notice stating reasons within 30 days of transfer. This is distinct from ordinary objection to a change of employer. Compare the old and new role, place, schedule and remuneration, including practical effects, before taking a position. A new badge or reporting line does not, by itself, establish substantial detriment.
Two examples and a closing checklist
Suppose a buyer takes over a warehouse operation with its equipment, customer orders, lease and dispatch team. Continuing the same activity with those resources points toward a transfer analysis. Before closing, the parties should reconcile overtime and holiday records, communicate who will pay the first post-closing payroll and consult on proposed shift changes. An agreement that the seller funds historic overtime does not alone answer which employer an employee can pursue under the Code.
Now suppose an investor buys shares in a company whose contracts and payroll remain with that company. That ownership change does not by itself replace the employer. If the investor then moves a staffed service desk and its operating resources to a sister company, test that second step independently. If the receiving company proposes a material relocation, document its effect on employees and evaluate alternatives before announcing a final decision.
Before committing to a transfer date, obtain the transaction perimeter, employee and payroll records, applicable agreements, a list of planned changes, evidence of consultation and a plan for open claims. Assign responsibility for first payroll, employee enquiries and closing records. For buyers and sellers, the practical question is who will run the activity after closing and which people, terms and obligations follow it. Resolve that question before making staffing assumptions in the purchase price.
Official source: Albanian Labour Code, Articles 137–139/1 and Chapter XIV. Related service: Alba Legal employment and labour law.
