May 11, 2018
European M&A: Dealing with Employee Issues
This recent Cooley blog offers tips for addressing employment law issues when navigating acquisitions involving European buyers or sellers. This excerpt deals with issues surrounding reductions in force:
If a reduction in force is being contemplated in the EU (where it will often be referred to as “redundancy”), then that will trigger discrete information and consultation requirements. For example, redundancies in Germany require compelling operational reasons and the application of social selection criteria to potentially at-risk employees. If there is a works council in place, then that can potentially make the process slow and difficult.
Also, redundancy consultation processes in the EU often increase in scope and complexity as the number of employees at risk of redundancy increases. For example, if there is a proposal to dismiss as redundant 20 or more employees in the UK, then that will trigger collective redundancy consultation requirements including the election of employee representatives and a consultation period lasting at least 30 days before any dismissals can take place. It is not always possible to avoid redundancy consultation requirements by simply buying-out the risk (i.e., paying employees in lieu of a period of consultation), so preparation and timing is key.
Other topics addressed include the rights of employee representative organizations, implications of the EU’s Acquired Rights Directive for different transaction structures, employment contracts & protections against termination.
– John Jenkins