DealLawyers.com Blog

Dealing with labor and employment issues when acquiring a business in Europe can be a complicated process.  In addition to being represented by a national labor union, target company employees may also have local unions or work councils that have consultation or informational rights that the parties must address during the deal process.

This Willis Towers Watson blog offers some guidance on the rights that employees may have under the laws of various European countries, the type of issues that cross-border buyers may confront and advice about “best practices” on how to navigate them. This excerpt discusses the potential downside of labor law missteps during the deal process:

Understanding what information/consultation obligations might apply at the outset of the transaction and assessing whether they need to be built into the transaction structure and/or timetable are essential.

Not factoring in works councils is costly, time-consuming, detrimental to the deal’s “optics,” and will hinder the progression of a deal and even cause its demise. Tackling works council rights quickly and proactively is crucial to avoid unwanted delays or sanctions including:

– Penalties/fines, some of which can be of criminal nature (in France, for example)
– Strikes or employee walkouts that can impact the deal or delay the close
– Tense social climate
– Closing delay
– Damages (In Belgium, for example, companies may be required to pay remunerative damages to employees.)

The blog also highlights some country-specific obligations that buyers will need to have to factor into the deal process and that may impact the timing of transaction.

– John Jenkins