Mergers and acquisitions (M&As) can be an exciting time for companies but can also be downright challenging for employees. The typical stereotype during acquisitions and mergers is that everyone should expect layoffs. According to Harvard Business Review, acquiring companies usually terminate roughly 30% of employees due to redundancy. So it is no surprise that news of M&As is not welcome for some employees and indicates that they should brush up their resumes and start looking for a new job.
However, if you have little to no choice for employment elsewhere, the prospect of acquisition feels like having a gun pointed at your head. If you worry about your options and rights during an acquisition, read on to learn more.
Job security
Depending on local laws and your employment contract, if the company deems your position redundant, they may owe you severance pay or other compensation. In at-will employment states like Pennsylvania, employers can dismiss employees for any reason not prohibited by law. However, certain protections may still apply during mergers and acquisitions. These protections can include requirements for severance pay, notice periods and protection against unfair dismissal.
Existing and new contracts
The acquiring company must honor your existing contract during the transition period. During this time, the new company will negotiate a new contract with the employees, who have the right to accept or reject the contract. In an at-will employment state, the company has the right to terminate you if you decide to reject the new contract. You cannot force the company to retain you under your old contract. However, if you disagree with the new contract, the company cannot force you to remain.
If the acquiring company is interested in retaining employees, they will include retention benefits such as a signing bonus, better benefits and more opportunities for promotion in the new contract.
Constructive dismissal
Employers must notify and consult you about changes to your job, contract and work conditions. If the new contract significantly changes your job conditions to your detriment, you may be able to argue that your new employer effectively forced you to resign by making your job untenable. If such a thing happens, consider consulting a lawyer to explore your options for legal action.
