Why Must Collective Agreements Be Considered During A Merger

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  • 16 Aprile 2021

These are some of the most important questions that merging parties must answer before launching a merger. These risks are real and should be taken seriously. This article explains the challenges and practical realities of managing staff during a merger. Mergers are required to renegotiate all previous collective agreements, as unions registered under Nigerian law can demand and enter into negotiations with employers. If the merging companies do not renegotiate the previous collective agreements, the unions concerned can exercise their legal powers by organizing a peaceful strike or strike action that often disrupts the activity of the newly created entity. Transfer of employment contracts Another topic to consider is the transfer of employment contracts from one company to another. Depending on the entity resulting from the merger, it is likely that the contracts of some employees will have to be changed. It`s a problem. Employees can enter a company for a number of reasons beyond the compensation package, including management, reputation and location. Changing an employee`s contract may affect the main reasons for accepting this role. In addition, the employment contracts of important workers are often subject to competition restrictions and other restrictive agreements. If a merger is horizontal and the worker has a non-compete clause in his or her letter of employment, it must be amended to reflect the new employer. Mergers are a way for companies to increase their turnover and grow their business.

However, with these advantages, there are a number of risks associated with the merger of two or more companies, including: the U.S. merger and acquisition business had another year of work in 2019, with a total of $1.1659 trillion domesticly, almost the significant year of 2018, according to reports of the fifth annual global transactions published by Oxford Economic Ltd and Baker McKenzie. The accrued requests of the employees Another relevant problem is the fact that the claims of the staff have been accumulated. Mergers are common when a company is about to be liquidated. Such a company may have guidelines that reward the performance of employees with commissions or bonuses, and employees` rights on those benefits may be incurred and remain unpaid if the company makes a loss. In the event of a merger, these claims must be reviewed, as this may affect the value of the company`s shares or even cease the transaction if the employees` claims are significant. This means that the takeover company is not in a position to change the terms of employment of workers covered by the existing KBA for the duration of the contract without the union`s agreement. In addition, the National Labor Relations Board has decided that exerting economic pressure to force a union to resume negotiations in the middle of the contract is a violation of existing labour laws for employers. Whether the acquisition is done as a share transaction or as an asset transaction could have a significant impact on the status of the existing union and the company`s obligations to the union.