How to Make Staffing Changes Following a Merger

Mergers are difficult and worrying times for employees of the 2 merging companies. Fears about the effect of the merger on job security, employment benefits and company structure can create a tense corporate environment. However, by carefully reviewing your obligations and acting with care, you can make staffing changes following a merger flow relatively seamlessly.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Your merger agreement
• Final paychecks

Consult the Merger Agreement

1. Review the merger agreement carefully to see which employees are owed cash or stock benefits upon termination. This will help you rank the cost of making staffing changes.

2. Read the merger agreement to see whether you contracted to keep certain employees on staff. After the merger, certain representations made by you in the merger agreement become indemnifications after closing. This means that you may be liable to the other company for your failure to honor the agreement if you change staff that you said you wouldn't.

Negotiate Non-Competition Agreements

3. Offer an increased severance package to employees in exchange for them signing non-competition agreements. Non-competition agreements will help ensure that the profit projections you made prior to the merger remain valid.

4. Check your merger agreement for any non-competition clauses included therein that relate to specific employees. Replacing employees who are bound by non-competition agreements protects your investment.

Handle Staffing Changes With Professionalism

5. Create a document following the merger explaining the reasons for the staffing changes. Distribute copies to those who will be laid off and to those who will remain with the company.

6. Handle staffing changes following a merger with each employee in a private setting and have each person's final paycheck ready.

7. Bring all employees you plan to keep on together for a meeting. Explain why you made the staffing changes you did. Reassure the remaining employees that they are integral parts of the newly merged company.

8. Make up a termination agreement detailing the reasons for the layoff, the terms of the severance package (if any) and the amount of the final paycheck. Ask the employee to sign the agreement. This will help insulate you from potential wrongful termination lawsuits.

Tips & Warnings

• Give employees you intend to let go 2 weeks advanced notice. You expect the same notice when employees quit, and giving them the same courtesy will help diffuse negative feelings about the company.
• Resist the impulse to make staffing changes for personal or political reasons. Such choices can bring increased negative publicity to the company.

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