South Africa: After the Sale - Look Who's Coming Along

opinion

Johannesburg — EMPLOYEES are often the last to be considered when one company acquires another. This neglect is a cardinal error. In the process of making an acquisition -- whether by way of a purchase of the assets or the shares of the company -- the buyer will often restructure certain areas of the newly acquired company. This will inevitably have an effect on the employees of such a company. It's a situation that needs to be carefully considered before concluding the transaction, and one that has been brought into focus in the wake of the recent heightened acquisition activity between firms in the UK and SA. A purchaser must be aware that it will not be allowed to pick and choose which employees stay on with the newly acquired company, nor may it dictate the terms under which those employees remain employed.

The relevant legislation governing employee transfers in the UK is the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006), which became effective in April as a replacement for the 1981 TUPE regulations.

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