Corporate Restructuring: Safeguarding White-Collar Employees

Abstract

After the first merger wave in the late 1890s, companies are constantly trying to outperform each other to cope with globalization and increased competition in the markets. India faced its first wave of corporate restructuring post the liberalisation period, i.e., in the second half of the 1990s. To stand out in the market and expand the business, more than often, companies end up tying knots with other companies in one form or the other. Such arrangements cause a lot of problems for the workers working in the transferor companies. Out of these, the white-collar employees (“employees”) who work in the managerial and administrative capacity are affected the most. Due to redundancy, such transfers leave the employees high and dry. They are forced to accept the terms of the restructuring, and they do not receive any economic protection from the labour laws of the country like the other workers. Thus, this paper discusses the scope of the current legal system which helps in protection of the white-collar employees during such transfers, and how can we improve the same.

The first part of the paper discusses the different ways in which the companies initiate the process of ‘corporate restructuring’ and how it is problematic for the employees of the selling company. The second part of the paper discusses the needs of protecting such employees. The third part critically analyses the current labour laws and cases which come to the rescue of the employees during such transfers and help in protecting their interests. The paper also examines the labour laws enacted under various jurisdiction dealing with the stated matter. The paper, in the end, provides some changes in the Indian legislation to improve the protection mechanism of the employees during a corporate restructuring.