Changes to the corporate structure of a business (such as through mergers and acquisitions, outsourcing and/or disposal) may have significant human resources implications. Although HR issues may not always start out as a priority agenda item, they can become a sticking point in the transaction if not managed effectively. Early input from HR can help to ensure the transaction proceeds more swiftly and with less legal and commercial risk to the business. In this article, Christopher Fisher and Michelle Last examine some of the ways HR can assist in this respect.
Managing affected employees
One of the most basic, yet critical, HR issues in corporate transactions is the early identification of employees who are likely to be affected. This can be a difficult and time-consuming task, particularly where the business is large, employees have mixed roles, and there are contractors and/or international secondments. If the transaction is one to which the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) might apply, this will be one of the first issues to consider. Be aware that TUPE may also apply in share-sale scenarios if there is also to be a business transfer or outsourcing before or after the transaction.
HR can also play a key part in ensuring that the workforce employed in the business post-transaction is stable and motivated, and that key employees are retained in the business. For instance, these employees can be provided with financial incentives in return for agreeing to stay with the business and, possibly, to enter into non-compete provisions. Other methods that can be deployed can include: effective appraisal processes; training and developing employees; and employee road shows. It may also be useful to undertake an employee survey once the dust has settled, to identify any ongoing employee concerns.
Harmonising terms and conditions
One issue that often arises is a purchaser's desire to harmonise terms and conditions of employment. In Europe, if the transaction is one to which the Acquired Rights Directive (ARD) applies (ie the European legislation upon which TUPE is based), it can be difficult to make such changes: the ARD is generally aimed at preventing such changes taking place. In the UK, an employer can make changes to terms and conditions provided they are unconnected to the transfer, or are for a reason which is con