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How to manage downsizing in a business merger

On Behalf of | Jun 12, 2020 | Business Litigation |

One of the best ways to grow an existing business is to merge with another company in the same industry or with facilities that could benefit your business. Unfortunately, some of that growth may be more than what is currently sustainable for your company.

You may have too many salaries to pay and redundant staff positions. Downsizing often plays a key role in successful mergers. However, it’s important that you plan carefully in order to legally engage in downsizing without risking potential lawsuits against your company by former employees.

Take the time to evaluate each position and process in the company

A merger that results in downsizing isn’t just a convenient excuse for management to fire the people whom they don’t particularly like having on staff. It is possible to get rid of problematic employees during a merger.

However, you will need documentation that shows that they have had performance or attitude issues that justify you retaining someone else over them. The more closely you evaluate the company’s businesses and the better you document redundancies, the harder it will be for someone to make a claim against the company as a result of downsizing efforts.

Take time to review final decisions before you announce anything

It is possible for a company to unintentionally include discriminatory factors in their decision-making process without meaning to. It is very important to review all of the terminations involved in the merger-related downsize carefully.

Are the majority of the workers of a certain race or over the age of 40? If a disproportionate number of the people nominated for termination belong to a protected group, it may be time to review the criteria used to evaluate employees and revisit the decision-making process. This can help keep you out of litigation