Employment Law in M&A

Human resources are one of the most sensitive and legally complex issues during Mergers & Acquisitions (M&A) transactions. With the tightening of the Labor Code in Georgia, protecting employee rights during company reorganization or alienation has become critical. The law explicitly protects employees so that the transfer of business does not become a ground for their dismissal or deterioration of conditions (similar to TUPE regulations). Improperly managed HR processes can lead to mass litigation, fines, and reputational damage, ultimately reducing the deal's value. Specialists on Legal.ge help you manage labor risks at all stages of the M&A process — from Due Diligence to post-merger integration.

What Does Employment Law in M&A Service Cover?

Our employment law experts provide:

• HR Due Diligence: Detailed checking of the target company's employment contracts, internal regulations, bonus systems, and ongoing labor disputes to reveal hidden liabilities.
• Employee Transfer Management: Ensuring the preservation of employee rights during the Transfer of Business in accordance with legal requirements.
• Reorganization and Redundancy: If optimization is needed after the merger, planning and executing lawful and fair redundancy procedures.
• Harmonization of Compensation Packages: Merging different salary and bonus systems when two companies combine, ensuring non-discrimination norms are met.
• Management Contracts: Outlining conditions for Top Management Retention or Severance.

Real-World Scenarios When You Need This Service

Labor issues come to the forefront when:

• Asset Deal: The buyer thinks they are only buying a factory, but under the law, the personnel employed there may automatically transfer with it.
• Duplicated Positions: After a merger, the company has two CFOs or two marketing teams. Redundancy must be conducted using objective criteria.
• Retaining Key Employees: The buyer wants to ensure the core team does not leave after the deal. Retention Bonuses need to be structured.
• Dealing with Trade Unions: If the target company has a strong union, any change requires prior consultation and agreement.

Georgian Legal Framework and Regulations

The main regulator is the Organic Law of Georgia "Labor Code of Georgia". Articles regarding the "transfer of enterprise" are particularly important. According to the Code, the alienation of an enterprise is not a ground for terminating employment relationships. The new employer becomes the successor of the old employer. This means the buyer is obliged to maintain existing working conditions. Violation of these norms leads to compensation claims and employee reinstatement. A professional lawyer will help you manage these risks.

Service Process

The Employment Law in M&A service on Legal.ge includes:

1. Audit: Full check of the target company's HR documentation.
2. Plan Development: Creating a plan for employee information and consultation (mandatory by law).
3. Documentation: Preparing new contracts, notices, and orders.
4. Implementation: Managing the process on Closing day and during the post-integration period.

Why Choose Legal.ge?

In M&A transactions, labor disputes are often the loudest and most expensive. Specialists on Legal.ge have experience protecting the interests of both employers and employees during reorganization. We will help you implement changes in full compliance with the law while maintaining team motivation.