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Mergers and Collaborations - the Key HR Issues

on Friday, 08 April 2016.

The current area reviews are likely to result in many colleges considering ways of working more closely together.

In some cases, this may take the form of a merger but collaborations short of a merger, such as federations, joint ventures or shared service companies, are becoming increasingly popular. Such developments usually have significant implications for employees and it is important that the HR and employment risks are anticipated and managed.

What should you be considering?

Whatever the proposed structure, we find that in these situations the following issues tend to be the key from an HR perspective:

  • In a merger situation, a Model A merger involves the dissolution of the colleges involved and a new college being established, whereas in a Model B merger, there is a dissolution of one or more colleges, and all the assets and liabilities are transferred to one of the existing colleges. Whilst from an employment law perspective, both types of mergers involve a TUPE transfer, it is the softer HR issues that can be more difficult to handle in practice, as staff can feel very unsettled and demotivated if they feel that their college is being 'taken over' by another college.
     
  • Planning is key and it is important to establish a timeline that allows for unforeseen issues and in particular for informal and formal consultation with staff, so that they get on board with the proposal. Regular staff updates, including responses to frequently asked questions and perhaps a dedicated email address for queries to be sent to can help keep staff engaged and give them a sense of being involved with the decision making process.
     
  • A particularly thorny issue can be that of leadership and who the senior postholders will be in the new structure. In a collaboration short of a merger, thought needs to be given to who will employ those in key roles and whether there should be joint employment. In a merger situation, it is often assumed that one of the Principals of the merging colleges will become the Principal of the merged college, which in itself gives rise to selection issues. However, it may be that the merged college wants to consider an externally appointed Principal and also external appointments to other key roles, in which case there will be many practical as well as legal issues to consider.
     
  • A collaboration or merger often gives the ideal opportunity for a restructuring. This may take the form of redundancies or in some cases involve completely restructuring roles from top to bottom. If there is a substantial restructuring, this may give the opportunity to harmonise terms and conditions of employment earlier than might otherwise be the case.
     
  • Providing information to and consulting with trade unions or employee representatives in relation to affected employees can be a time consuming process. Although there is no set time scale for a TUPE consultation, it should take place long enough beforehand to enable proper consultation to take place. It is also important to remember that employees affected by the transfer may not just be those employed by the transferring college, but there could also be employees in the receiving college or entity who are affected, so are caught by the information and consultation requirements.
     
  • If redundancies are planned it is now possible for the new college or entity to start collective consultation about these redundancies pre-transfer, which can prevent the need for separate collective consultations under TUPE and in relation to any proposed redundancies.
     
  • Care needs to be taken with redundancy selection pools, as it may well be the case that a pool ought to include individuals from more than one college.
     
  • Finally, in collaborations short of merger, it is important to consider at the outset what will happen to employees on the termination of the arrangement, and ensure that this is provided for in the documentation setting up the collaboration.

We have substantial experience of advising on the employment and HR aspects of collaborations and mergers and would be happy to discuss any particular issues that you may have. Please contact Jane Byford on 0121 227 3712 for more information.

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