Employment issues in M&A transactions in Monaco

• A change in the ownership structure of an enterprise does not alter the identity of the employer. Monaco statute does not contain requirements relating to labour law in such share deal arrangements except if specific internal agreements with the purchaser of a share deal provide for specifics obligations towards employees. 
• In principle, employees are unaffected by a share deal. As a result, all their terms and conditions of employment remain the same pursuant to the public provisions stipulated under Article 15 of Law n°729 of 16 March 1963.

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• Although there is no general legal obligation to inform employees/employees’ representatives of a share deal, there may be relevant agreements specific to the company which contain information obligations.

• Not applicable (unless otherwise stated in a relevant internal agreement)

• A change in the ownership structure of a company does not alter the identity of the employer. Monaco statute does not contain significant requirements relating to labor law in such share deal arrangements except if specific internal agreements with the target of a share deal provide for specifics obligations towards employees. 
• In principle, employees are unaffected by a share deal. As a result, all their terms and conditions of employment remain the same.

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• Although there is no general legal obligation to inform employees/employees’ representatives of a share deal, there may be relevant agreements specific to the company which contain information obligations

• Not applicable (unless otherwise stated in a relevant internal agreement).

• The circumstances of the deal trigger a requirement for a transfer of employment contract pursuant to the public provisions stipulated under Article 15 of Law n°729 of 16 March 1963;
• This will be the case if an economic entity (an organised group of persons and assets performing an economic activity which pursues a specific purpose) is transferred to another employer whilst retaining its identity.
  All further comments in this section are based on these assumptions; 
• No recent or upcoming employment terminations stem from the deal. Otherwise, unfair dismissals will lead to high level of compensation (for damages and/or the employee’s reinstatement) for one or both parties to the Deal. 
• Which employees are allocated to the transferred assets; it is important for the seller to identify the employees to be transferred jointly with the assets in order to allow the purchaser to pursue these employment contracts under in the same conditions. 
• The terms of any relevant collective bargaining agreement or internal regulation include any information and consultation obligations in relation to the asset deal. 

• Not mandatory but recommended: notification letters to the employees concerned confirming the change of employer, the date of implementation and the retention of acquired rights (e.g. seniority, paid holidays…)
• Not mandatory but recommended: Three-part convention to be signed by the seller, the purchaser and each transferred employee in order to support the transfer conditions.

• Not mandatory but recommended: Inform the employees to be transferred of the change of employer. 

• Not applicable as long as the asset deal does not lead to the closure of the employees’ position within the seller company. Nevertheless, it is recommended to inform the employees’ representatives of an asset deal and the consequences on employment at their monthly meeting with the management team prior the asset deal.

• The file and information data of every transferred employee must be handed over to the purchaser.

• The circumstances of the deal do, in fact, trigger a requirement for a transfer of employment contracts pursuant to the public provision stipulated under Article 15 of Law n°729. 
• This will be the case in the event of an asset deal provided that an economic entity (an organised group of persons and assets exercising an economic activity which pursues a specific objective) is transferred to another employer whilst retaining its identity.  
• Which employees are allocated to the assets and will be transferred to the purchaser of the assets as a result of the transfer.  
• The relevant information pursuant to any individual or collective bargaining agreement, or internal regulations of the seller (if applicable). 
• All individual rights acquired by employees are transferred to the purchaser and in particular: the payment scheme applicable to these employees, including basic remuneration, any additional bonuses, payments and other incentives, labour regulations, holiday entitlements, etc. 
• Any outstanding liabilities existing towards employees, considering that the new employer will be 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.). 

• Mandatory in the event of transfer of the employment contract to the new employer: signature by both parties (employee and purchaser) of the administrative form for modification of the employment contract with payment of a EUR 5 registration fee to the employment service for each employee transferred.  
• Not mandatory but recommended: Three-part convention to be signed by the seller, the purchaser and each transferred employee in order to support the transfer conditions. 
• New employment contract with the employees to be transferred. 

• The Labour Authority of the change of employer of the transferred employees.

• Not applicable as long as the asset deal does not lead to a closure of the position within the purchaser company.

• The purchaser must provide the transferred employees of the target company with the same acquired individual rights they enjoyed previously. 
• Provide each of the transferred employees with a copy of all HR policies, rules and regulations used by the purchaser, if applicable.

•  The identity of the employer changes for the employees (this will always be the case for all employees in the event of a merger involving the creation of a newco); or 
• The identity of the employer remains the same for certain employees (this may be the case in the event of a merger by means of absorption); 
• In the event of a merger pursuant to the first paragraph, all pre-merger companies are subject to the obligations of the seller in an asset deal (see point B. I.), whereas the post-merger company is subject to the obligations of the purchaser in an asset deal (see point B.II); 
• In the event of a merger pursuant the second paragraph, the company acting as the employer of any such employees does not need to meet the requirements of an asset deal regarding those employees as outlined in the third paragraph. 
• 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 transferred across to the new/surviving entity; 
• Employees enjoy a particular status in as much detail as possible, including the content of employment contracts, holiday and payment entitlements, the 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. 

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