Updated HSF multi-jurisdictional guide to employee issues in business transfers

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. In the Herbert Smith Freehills 2016 global survey, 57% of respondents cited employment regulations as one of the reasons a deal had failed to complete. 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, the implementing legislation in each Member State is far from the same. We have been involved in many multi-jurisdiction outsourcing arrangements across Europe where changing the outsourced provider of relevant services has not resulted in the regulations applying eg, in Italy, Germany, France and Spain. This is particularly the case where a discrete group of services transfers rather than an entire business. In our experience, different Member States undertake slightly different analyses with many focusing on the need for assets to transfer with the employees before the regulations would apply. 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.

Timing is often key in a multi-jurisdiction business sale and the requirements – and consequences for breaching - information and consultation processes also vary considerably, posing significant challenges for employers. The devil, as they say, is in the detail.

Our global EPI team has recently updated its guide to employee issues on a multi-jurisdiction business transfer, to assist our clients in meeting some of these challenges. The guide has been expanded and now covers 51 jurisdictions, containing an overview with key practical steps that can be taken to address the risks and a top level summary of the main employee issues in each jurisdiction. Please click here to request a copy