What should employers consider when thinking about redundancies after a merger? Legal experts comments

by | Mar 27, 2023

Share this article

Written by Aleksandra Traczyk, Associate at Winckworth Sherwood

Stories have been aplenty on the recent banking M&A activity completed in a matter of days – such as the recent emergency acquisition of Credit Suisse by UBS and HSBC’s purchase of the UK subsidiary of Silicon Valley Bank. 

Deals such as these, combining existing business operating in the same sector, are likely to leave employees – on both sides of the merger – nervous about their future. Inevitably, redundancies may follow where there is duplication of roles between the two organisations and/or an attempt made to change the terms and conditions of employment.  

However, even following an M&A deal necessitated by an emergency situation, any subsequent redundancies must be handled correctly.  

 
 

If 20 or more redundancies are proposed in any 90-day period, the employer will have to consult collectively with employee representatives (in addition to undertaking individual consultation). The requirement to consult collectively imposes a stricter set of rules; these include that the employer must:

  • notify the Redundancy Payments Service before a consultation starts, remembering that an employer can be subject to an unlimited fine if they do not make this notification;
  • consult with trade union representatives or elected employee representatives;
  • provide information to representatives or staff about the planned redundancies, giving them enough time to consider them and respond to any requests for further information.

If the number of proposed redundancies is 20 – 99, the employer must consult for a minimum period of 30 days before the first dismissal; if the number is 100 or more, that period is 45 days.

Where redundancies arise from duplication of roles between the two organisations, it should not automatically be the case that employees at the acquired company are selected for redundancy.  The process is likely to have to involve consideration of pooling employees across both companies (e.g., where there is duplication across the same function).  Fair selection criteria must then be applied to any pool, before selecting any employees for redundancy. Those selected for redundancy should be given an opportunity to apply for any vacancies in the organisation and this could include vacancies from within the whole group (not just the acquiring company itself). 

 

In some cases post-acquisition integration can result in an automatic transfer of employment between under TUPE (Transfer of Undertakings (Protection of Employment) Regulations) between the acquired entity and the purchaser, such as if an entire function is transferred.  This can add complication, as TUPE carries its own consultation obligation and certain additional protections for employees. 

Share this article

Related articles

Trending articles

IFA Talk logo

IFA Talk is our flagship podcast, designed to fit perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast - listen to the latest episode

x