There are countless ways for a business to expand itself and either change its operations or broaden the services and goods that it provides. A merger with another company is a common tactic that can ensure your company receives nearly instant access to valuable infrastructure and staff.
However, when two businesses merge, it’s likely that some of their equipment and facilities and some of their staff may become redundant. In that circumstance, downsizing could play a role in the process of merging the businesses. Any company attempting to downsize must take great care to document the steps along the way in order to protect themselves.
Downsizing can lead to claims of discrimination and wrongful termination
Those who lose their employment as part of a merger may feel as though the company violated their trust or even their rights as a worker. The more careful and transparent you are with the downsizing process, the more warning your staff will have and the less likely they are to feel suddenly victimized.
Given that upset and frustrated workers could cost your company thousands of dollars by bringing legal action against the business, you want to be able to show that the company did not engage in any sort of personal or systemic discrimination during its determinations about how to merge the business.
Make sure company records reflect the redundancies you hope to address
Depending on the type of business you operate and the business you merge with, there could be one position or dozens in your company that overlap with positions in the other business. There should be a clear paper trail that shows that there are now two accounting managers or two structural engineers.
If your company cannot reasonably utilize or continue to compensate two of these professionals, selecting the one with the better work history or higher credentials will show that your company made decisions based on performance, not out of discrimination.
Also, prior to completing the merger and announcing who will lose their position or wind up downsized, it’s important to review the information about those individuals. If a significant number of them belong to a protected group, such as a racial minority, an under-represented gender in your industry or workers over the age of 40, those workers could theoretically raise the concern that their protected characteristics played a role in their termination.
The more closely you document workers’ performances and the process by which you select who you retain and who you get rid of in a merger, the harder it will be for people to bring unfounded legal claims against your company.