Legal Issues Of Protection Of Labor Rights Research On M&A

In the regime of labor protection in M&A, most theoretical researches related tothe protection are unilateral: they either focus on the corporate governance issues inM&A or the accept of employment contract of the acquirers. Essays analyzing bothissues are rare. Recent disputes related to labor protection in M&A cases havereflected the practical side of the issue. There have been several relative cases whichstressed the problem, which include the labor dispute case emerged in the acquisitionof Shanghai Shuang Long company in2004, employee acceptance case in the2011Nokia and Motorola takeover, protest from Snow beer employees against the takeoverof Snow by Budweiser in2012, labor disputes in Wumart’s takeover bid for CP LotusStore in2013and the massive scale dimission in the2014Lenovo and IBM takeovercase.Regarding the labor protection issues emerged in mergers and acquisition, thelegal relief could help to strike a balance between the power of employees andemployers, however to a large extent, it is still a pending problem itself. As a freeentity with free will, employees are entitled with the right to know and express theirobjections to the company’s activity. According to the current provisions in law, themethods utilized to make employees’ opinion a concern of board meeting are mostlylie in the regime of corporate governance, which include the function of employeeshareholders, employee directors, employee supervisors as well as the employee’sconference and the labor union. The pre-participation mechanism in corporategovernance enables employees to reverse the takeover bid and prevent their legalrights from being harmed during the takeover process.In this dissertation, the author would illustrate a double layer frame whichcombines the "labor protection in corporate governance" and "the acceptance ofemployment contract". The discussion would be done from the perspective of"pre-anticipation" as well as the perspective of legal relief afterwards.There are four parts in this essay:In the first part, the author tends to demonstrate the necessity and legitimacy oflabor protection in M&A activities. To analyze the relationship between M&Aactivities and labor protection, four related theories would be used, which are the connected person theory, human resources theory, human rights protection theory andthe Game Theory related to the conflict between labor and capital.The second part is about comparative research. In this part, rules related to laborprotections in other jurisdictions would be analyzed to show the typical resolution tothis issue. The author would discuss: the German double committee system and itsrules related to the power labor union; the life-time employment system and collectivenegotiation mechanism in Japan; issues of Employee Stock Ownership Plans in U.S.;the equity mechanism in labor law in Taiwan and problems in the gray zone. Amongthe comparative research, the emphasis would be on other jurisdictions’ experience ondealing with employment contract in M&A and their experience on dealing with largescale redundancy. In addition to these, measures adopted in helping employees getreemployed would also be taken into consideration.In the third part, through analyzing the allocation of employees’ powers incorporate governance and its conjunction with the labor protection in M&A, the twomajor problems in labor protection during mergers and acquisitions, which are thelack of participation of employees in M&A and the lack of protection in labor law,will be raised. Specifically, the former includes the chaotic arrangement of shareallocation, the lack of supervisions in companies and the disfunction of most laborunions; the later includes the incompatibility of current labor law provisions with theparticular situation in M&A, the absence of employee’s rights of inspection andobjection, the defects existing in economic redundancy mechanism and the lack ofmethods promoting reemployment.The final part is about the solution for the current problems. The author suggeststwo models to react to the existing problems in M&A. The first is to establish astructure with employees holding shares of the company the centre of corporategovernance, while the importance of employee directors, employee supervisors,general meeting of employees and labor union decrease progressively. On the otherhand, as for the loopholes in current labor law governing M&A and employmentcontract inheritance, the author suggests to reconsider the requirement for legalentity in taking over employment contract and add right of inspection as well as rightto objection into labor law to specify the methods used in cutting off employees.Besides, the improvement in implementing unemployment insurance and arranging re-employment are also proposed. Above all, through the implementation of variousmethods, employees could get fair protection in the process of M&A.