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Mergers: What about the staff?

  • News
  • August 16, 2019
  • Jai Breitnauer
Mergers: What about the staff?
As part of a recent look at retail mergers, Jai Breitnauer considers their effect on staff.

When a company is acquired it comes with many assets – the existing staff can be one of them. But whether you are senior management or Saturday staff, this can be a worrying time. Chris Wilkinson from First Retail Group says that if it’s handled well, it needn’t be.

“The advice we'd give to staff members would be to actively participate in discussions, ask plenty of questions and be objective in your decisions. It's often a time of stress and anxiety, so people can become emotionally charged,” he says. “Communication is the most important aspect. Talk with those involved to share your feelings respectfully.”

Communication, he says, goes two ways. 

“We'd expect purchasers to be open with staff, sharing information on their new employer including background, culture, values and vision,” he says. “This will help people better understand future ethos and intent, and interpret long term potential for their role suitability, skills and approach - which may or may not align.”

When it comes to the employee experience, Kylie Dunn from Russell McVeagh says in some types of merger, there is no requirement to renew an employee contract.

“In an asset sale, the entity acquiring the assets of the company has no obligation to offer employment to any of the employees - except for those [vulnerable] employees who perform work listed in Schedule 1A to the Employment Relations Act, mostly cleaning and catering work,” she says. “Outside of that narrow category, it is for the vendor and purchaser to agree whether employment will be offered, and on what terms.”

Yates notes that all companies have an obligation to act in good faith and communicate well. The issue of negotiating new employment contracts in an asset merger is an example of when a target company can exercise care for its employees in the negotiations.
“For example, the issue of annual leave can be delicate,” says Yates. “Many employees would prefer their annual leave to be carried over, whereas the buyer may prefer it to be paid out and to start from scratch. Ultimately, it’s for the seller and purchaser to agree, but they should make sure that employees feel protected and engaged in the process.”

This story originally appeared in NZ Retail issue 762 June/July 2019.

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