Many entrepreneurs who sell a business want to leave staff well behind. Some even demand certain securities for their employees during negotiations. But what rights do staff have in a business acquisition?
It is wise - before you take over the business - to look into the situation of the employees. What kind of contracts are there, are they sick? Is there a pension plan and are the salary payments running smoothly? This and more is revealed by conducting a due diligence.
Informing the staff
Often the staff does not know about the sale until the signatures have been signed. However, employees are the first group to hear the news in person. It is wise to convene the staff the morning after the acquisition and speak to the staff with the seller. As the former owner, the seller delivers the big news, explains his considerations and thanks the staff for their efforts.
More importantly, he introduces the buyer as a competent entrepreneur taking over. Then the buyer tells about his background, the motivation for taking over the business and his plans for the business.
Either way, employees are overwhelmed by the news. They are filled with emotions and want their questions answered as quickly as possible. The buyer is the new point of contact for employees from that moment on. Be sure to discuss in advance with the seller whether you want to make any statements about the acquisition price, terms and deal structure.
If the company has at least 50 employees, then informing the staff during business acquisitions is the task of the works council. The works council knows when, and in what way, to inform the staff. Guidelines for this are laid down in the Works Councils Act (WOR). In general, employees are informed when the letter of intent is signed.
The rights of staff with business acquisitions.
There is fairly little to discuss about the rights of staff, because in a business acquisition, employees are included. There is no choice for the buyer; the employees keep all their rights and obligations. The buyer not only takes over the primary working conditions, but the secondary working conditions also simply go with them.
Even employees who are sick are not to be let go. The wages are simply paid during the period of illness, you have to carry out the reintegration obligations properly and the costs of reintegration are yours.
For the duration of one year, the new owner is responsible for the personnel. After this duration it is possible to tinker with the employment contracts and you can possibly start reorganizing, as far as personnel is concerned.
Are there any exceptions?
Absolutely. Like almost all laws and regulations, there are exceptions. If you take over a business, then in some cases you are allowed to choose which staff members you take over:
- If the business went bankrupt before you take over;
- The business' operations change 180 degrees.
