4 Rights Of An Employee When A Company Is Sold Off. What comes to your mind when information leaks to you that the company you are working for is being sold? Panic, maybe uncertainty or fear of losing your job sets in. That’s the typical human reaction. And recent examples playing out in the media are many with the most recent case being the acquisition of Essar Telecom’s yuMobile that was sold to two other mobile providers; Safaricom and Airtel. And the employees are not taking the matter lying down opting to head to the Courts of Law. In such cases should the employees disregard their existing contracts and ‘accept and move on’ or do they still have entitlements to claim even when the company is sold off? 1. Notice and Payment- According to Tabitha Kibe, Human Resource Manager, Farm Concern International, every contract has an exit route. “It is usually upon the former owner to sell off the firm together with the staff to the new owner. On the other hand, if the former employer wants to let go of the workers, he may do so according to the law which is usually the standard one month’s notice in lieu of payment.” Understand your rights 2. Contracts Validity - In a slightly different scenario, Ms Kibe says both the former and the new owner of the firm can negotiate a deal and agree on the status of the employees but in all these, there should be goodwill put into consideration. “Employees are set to retain their rights even when a company is sold,” says Ivia Kitonga of Nzamba Kitonga Advocates. “When you say a company is sold, it means it has been sold together with its liabilities, assets and that includes employee contracts as well,” he says. 3. Compensation - One scenario likely to bring a complication, Mr. Kitonga points out, is when the new owners decide to restructure the company and that might include letting go of the existing employees and bringing new staff on board. “However, says Mr. Kitonga, “the new employer cannot just dismiss the employees. The Employment Act stipulates that when he decides to do that then he should do it on notice as well as offer the compensation and entitlements due to the employees.” He adds that compensation might include allowances as well as pension. According to Mr. Kitonga, the contracts signed between the employees and their former bosses remain valid—unless they have expired. “The same terms under which these employees were hired before the company changed ownership will still apply and if this happens not to be the case the law provides for them to sue the new employer for violation of their rights. In the meantime, the employees will continue to operate according to the terms of the old contracts until they expire and that is when the employer might be free to either re-negotiate with the employees or not to extend the contract.” 4. Legal Redress - The other scenario is when the employer declines to adhere to the old contracts and this might get him before the industrial court. “When it can be proved that unlawful dismissal has occurred, the court can award compensation equivalent to the salaries and benefits the employee might have gotten up to the end of the contract. Currently, the constitution does not allow for someone to be over-compensated and the era of punitive fines on employers is coming to an end.” And as Ms. Kibe puts it, it is easier for the laid down procedures to be followed rather than engage in lawsuits. “It appears easier said than done but what most new owners do is opt to retain staff from the former owners as they tend to know the firm’s clients better. The best way to go for an employer who is selling his firm is letting the workers know how they are being handed over. In this way, workers who do not wish to move to the new management can opt to resign. It is not right for employers to just let them go,” she says.
Posted on: Thu, 13 Mar 2014 07:46:59 +0000
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