Cross-border guide: Multi-jurisdictional business transfers – employee issues

A quick reference guide to law governing employee transfers in 32 key jurisdictions in EMEA, South and Central America and Asia-Pacific:  Australia, Brazil, Chile, Colombia, France, Germany, Guinea , Hong Kong, India, Indonesia, Italy, Japan, Malaysia,  Myanmar, Mexico, Netherlands, New Zealand , People’s Republic of China , Peru, The Philippines, The Russian Federation, Singapore, South Africa, South Korea, Spain, Taiwan,  Thailand , Turkey, United Arab Emirates, United Arab Emirates – DIFC, United Kingdom, Vietnam.

Employment law issues rarely determine the strategy for a multi-jurisdictional business acquisition, but they can certainly give rise to significant avoidable costs and delay if issues are not spotted in advance. The temptation may be to assume that employee issues will be broadly similar in each country, but in practice employment law varies significantly from jurisdiction to jurisdiction and it is not even safe to assume that a particular continent will have a broadly similar approach.

For example, whilst European Member States have implemented the same directive, the Acquired Rights Directive (ARD), the implementing legislation in each Member State is far from the same. Most South American jurisdictions provide a similar level of employee protection, but there are notable exceptions particularly in relation to consultation obligations, while there is a wide variety of protection levels in Asia Pacific. The devil, as they say, is in the detail.

Timing is often key in a multi-jurisdiction business sale. How should the various independent information and consultation processes be run with employee representatives to make sure the deal completes on the date agreed between the parties? Some of the key challenges are:

• The information and consultation processes last different time periods depending on the jurisdiction, most of which are not for a fixed time period.
• The format for the information and consultation process differs between the jurisdictions, with different representatives involved, including employee representatives, works councils and trade unions, depending on the jurisdiction.
• The consequences for not completing the information and consultation process differ – in some jurisdictions there are civil fines, in others the transaction can be stopped until the process is complete, and in a minority there are criminal sanctions for non-compliance.
• In a few jurisdictions the information and consultation process must be started before signing of the deal, whilst for most jurisdictions it is sufficient for the process to be completed before completion of the deal.
• There may also be a European Works Council or other cross-border employee body to be informed and consulted with in addition to the domestic information and consultation process.

Our global EPI team has produced a guide to employee issues on a multi-jurisdiction business transfer, to assist our clients in meeting some of these challenges. The guide contains an overview setting out key practical steps that can be taken to address the risks, as well as giving a top level summary of the main employee issues in 32 jurisdictions. Please click here if you would like a copy.

• A recording of our video webinar on this topic is available here. This features a panel discussion of key dos and don'ts when transferring employees in various different parts of the world and key work-arounds in particularly problematic jurisdictions.