When planning to buy or sell a business, there are many legal issues that need to be considered all at once. In corporate negotiations and transactions, with teams working to tight deadlines on many parallel workstreams, often across multiple jurisdictions, employment law issues can, at times, take a back seat. But they are crucial and can have a major impact on value and timing. What happens to its employees when a business is transferred and when and how should they be informed and consulted? How to manage pay and pensions? What special arrangements need to be put in place regarding key personnel?
On this page, Ius Laboris lawyers from around the world have pinpointed some of the most important employment-related issues that need to be considered in corporate transactions. It is not intended to be exhaustive: each deal will present different challenges and employment issues will require case-by-case consideration and specialist advice. But we hope it provides a useful first port of call for HR and legal teams considering how employment fits in with mergers and acquisition (M&A) activities.
Key employment liabilities to consider in corporate transactions
When preparing for a corporate transaction, both sellers and buyers want to know potential significant employment liabilities so they can negotiate accordingly. This checklist summarises key employment law issues for buyers conducting M&A due diligence.
Top 11 employment provisions in M&A agreements
In mergers and acquisitions, both the seller and the buyer may need to include employment-related provisions in the M&A documentation. We have gathered together the most frequent and significant employment provisions for these types of transactions.
Employment issues on business transfers: a Ius Laboris survey
When a business, or part of a business, is transferred to a new owner, its employees have rights and the buyer and seller of the business have duties towards them. These differ across the world. In this survey, Ius Laboris lawyers briefly explain how five key employment issues that arise on a business transfer are handled in their countries.
Is there an obligation to consult employees?
In many countries, there is a duty to consult, or at least inform employees or their representatives on the transfer of a business. Here Ius Laboris lawyers in 49 countries explain the position in their jurisdictions.
How long should employee consultation last?
Employees may have a right to be consulted on transfer of a business: how long this consultation lasts depends on the country in which it is taking place.
Can failing to consult employees lead to fines, delays or stoppages?
In some countries a failure to consult employees when the business in which they are employed changes ownership can lead to fines or delay. Ius Laboris lawyers across the alliance set out the possible consequences in their countries.
Does the seller retain liability in employment matters?
When a business is sold, in the majority of jurisdictions we surveyed, the seller retains some liabilities in relation to employment matters.
Is it legal to dismiss employees on transfer?
In 30 out of 49 countries we surveyed, employers cannot dismiss employees on the grounds that the business in which they work has been transferred to new ownership.
Can employees object to transferring to a new employer?
Our survey reveals employees in a majority of countries do not have the right to object to their transfer to a new employer.
Every business is ultimately about its people and M&As, spin-offs and carve-outs are no exception. But what employment and personal data issues need to be considered when handling a corporate transaction of this kind and what are the potential pitfalls? We asked two specialist employment lawyers, Lee Nair and Ben Favaro, to answer our questions.
For more information about Business transfers
The resources on this page have been produced with the help of our lawyers in 50+ countries around the world. Sophie Maes is the Chair of our worldwide Expert Groups and Sam Everatt is the Executive Director of Ius Laboris. Contact us to find out more.