Employment issues in M&A transactions in Albania

1. Check whether:

• a representative trade union, employees’ representative or a health and safety committee (Art. 14 of Law no. 10237) has been set up at the target company;
• any individual employees or groups of employees enjoy special rights as a result of the share deal which may be set out in an individual employment contract, collective agreement, internal regulation of the target, etc.;
• any risks are identified during the due diligence process carried out on the target company, e.g. any pending employment-related litigation, inspections by labour control authorities, etc.

2. Prepare the following in draft form:

• appropriate information in written form to the trade union, employees’ representatives and/ or employees at least 30 days before the transaction takes place, setting out:
  • the proposed date of the change of employer;
  • the reasons for the change of employer;
  • the legal, economic and social consequences for the employees, and any proposed measures to mitigate such consequences.

3. Inform / Notify

• the seller/target company to carry out a consultation with the trade union representatives and/or employees’ representatives regarding:
  • the contemplated restructure and the date on which this restructuring will be carried out;
  • the reasons for the restructuring;
  • the potential legal, economic and social impact of the restructuring for employees.
•  any proposed measures with regard to the employees. The seller must notify its employees at least 30 days before the restructuring takes place.

4. Consult

• The purchaser is not obliged to consult with the employees of the target company. Instead, the seller/target company has a direct obligation to carry out consultations regarding the transfer
  consequences in the event of a share deal. The consultation process must be performed by the seller within 30 days of the notification period.

5. Implement 

• Closing formalities with regard to the  filing with the companies register of a share transfer agreement signed between the parties, approvals of the competition authority (if applicable), etc.

1. Check whether:

• a representative trade union, employees’ representative or a health and safety committee (Art. 14 of Law no. 10237) has been set up at the target company;
• any individual employees or groups of employees enjoy special rights as a result of the share deal which may be set out in an individual employment contract, internal regulation of the target, etc. Such rights may include additional entitlements in the event of a share sale, etc.;
• any special rights to information and/ or consultation exist other than those provided for in the Albanian Labour Code.

2. Prepare the following in draft form:

• appropriate information in written form to the employees’ representatives and/ or employees at least 30 days before the transaction takes place, setting out:
  • proposed date of the change of employer;
  • the reasons for the change of employer;
  • the legal, economic and social consequences for the employees, and any measures to mitigate such consequences.

3. Inform / Notify 

• trade union representatives and/ or employees’ representatives of the transfer regarding:
  • the contemplated restructure and the date on which this restructuring will be carried out;
  • the reasons for the restructuring;
  • the potential legal, economic and social impact of the restructuring for employees.
• any proposed measures with regard to the employees. Employees of the target must be notified at least 30 days before the planned restructuring takes place. Trade union representatives and employees’ representatives must in turn transmit the information received from the employer to the other employees and consider their opinions during the course of the consultations with the employer / target company.

4. Consult

• There is a direct obligation on the target company to carry out consultations regarding the transfer consequences in the event of a share deal. The consultation process must be performed within the 30-day notification period.

5. Implement

• Closing formalities with regard to the filing with the commercial register of a share transfer agreement signed between the parties, approvals of the competition authority (if applicable), etc.

1. Check whether:

• a representative trade union and/or an employees’ representative and/or a health and safety committee (art. 14 of Law no. 10237) exist within the company;
• one or more employees will be transferred to the purchaser of the assets as a result of the contemplated transfer;
• it is important for the seller to identify the employees to be transferred jointly with the asset(s) in order to allow the seller and the purchaser to take appropriate measures allocating the workforce in a mutually acceptable way.

2. Prepare the following in draft form:

• notification letters to the employees’ representatives or the union representatives, informing of:
  • the possible changes to the employer’s structure and the respective dates on which these changes are planned to be implemented;
  • the reasons for the above-mentioned changes;
  • the possible legal, economic and social implications of the changes to the employees;
• the information listed in section 2.1. above, to be presented to the employees’ representatives at least 30 days before the transaction takes place;
• amendments to the existing staff schedule reflecting the changes in the workforce of the seller as a result of the transaction;
• the relevant information pursuant to any individual or collective bargaining agreement, or internal regulations of the seller
  (if applicable).

3. Inform / Notify

• trade union representatives and employees’ representatives of the seller regarding:
  • the proposed new structure and the date on which this restructuring will be carried out;
  • the reasons for the restructuring;
  • the potential legal, economic and social impact of the restructuring for employees.
• any proposed measures with regard to the employees. Employees
  of the seller must be notified at least 30 days before the restructuring takes place.
• In cases where trade union organisations’ representatives or employees’ representatives do not exist, the employer must make such information available, publishing it in every workplace.

4. Consult

• Where measures are being planned, the employer is obliged to consult the trade union organisations’ representatives and/or employees’ representatives, and to strive to reach an agreement with such organisations.

5. Implement

• Any relevant agreements and regulations containing information and/or consultation obligations must be fulfilled by the employer.
• The file and data on every transferred employee must be handed over to the purchaser.

1. Check whether:

• the deal falls within the definition of an asset deal, in order to verify whether the regulations of transfer of undertakings shall apply;
• employees are to be transferred to the purchaser of the assets as a result of the transfer. It is also important to identify the payment scheme applicable to these employees, including basic remuneration, any additional bonuses, payments and other incentives, labour regulations, holiday entitlements, etc., as well as to check whether any outstanding liabilities exist towards employees. This is because both the former and the new employer will be jointly and individually liable for any such outstanding liabilities as a result of the asset deal;
• any risks are identified during the due diligence process of the target, e.g. any pending employment-related litigation, inspections by labour control authorities, etc.

2. Prepare the following in draft form:

• in case of an operational change, the seller has to send notification letters to the employees’ representatives or the union representatives informing of:
  • the possible changes to the employer’s structure and the respective dates on which these changes are planned to be implemented;
  • the reasons for the above-mentioned changes;
  • the potential legal, economic and social implications of the changes for the employees;
  • the measures to be implemented to fulfil the existing obligations of the employer towards its employees.
• the information listed in section 2.1. above to be presented to employees’ representatives at least 30 days before the transaction takes place;
• any amendments to the existing staff schedule, incorporating new job positions and/ or any transferred employees as a result of the transaction.  

3. Inform / Notify

• trade union representatives and employees’ representatives of the purchaser regarding:
  • the proposed new structure and the date on which this restructuring will be carried out;
  • the reasons for the restructuring;
  • the potential legal, economic and social impact of the restructuring for employees.
• any proposed measures with regard to the employees. Employees of the seller must be notified at least 30 days before the restructuring takes place.
• In cases where trade union organisations’ representatives or employees’ representatives do not exist, the employer must make such information available, publishing it in every workplace.
• The terms for informing and consulting employees’ representatives must be prepared in writing.   

4. Consult

• The purchaser is not subject to any consultation process. The consultation with the trade union organisations’ representatives and/or employees’ representatives is an obligation imposed on the seller only;

5. Implement

• The purchaser must provide the transferred employees of the target company with the same working conditions they enjoyed previously.
• If the transferred employees of the target company were subject to a collective agreement, the latter remains valid until its expiry.
• Provide each of the transferred employees with a copy of all HR policies, rules and regulations used by the purchaser, if applicable.
• Adjust any internal rules and regulations applicable to employees as a result of the transaction where necessary and ensure that all employees (both new and old) read and understand these.

The steps, rules, and regulations applicable to a merger transaction are similar to Section A. - Share Deal above, either where such a merger occurs in one of its classical forms, (i) more than two companies are wound up to form a new company, or (ii) one company (the surviving entity) takes over the other company.

In addition, it is advisable for the buyer/the merging parties to verify in advance if:

• any outstanding liabilities exist towards employees of the merging (absorbed) entity, which will be transmitted to the new/ surviving entity;
• employees enjoy particular status, in as much detail as possible, including the content of employment contracts, holiday and payment entitlements, presence of trade unions, any other special rights provided for in the individual employment contracts, and collective agreement and/or internal regulations, since all these will be transferred to the new / surviving entity.