When two companies go through a merger, it may make the resulting company stronger than either one could’ve been on their own. A large company may see this as a way to quickly expand its operations. A small company may see it as a way to grow dramatically with access to additional funding and resources.
But that doesn’t mean that it is a net positive for everyone involved. In some cases, a merger creates overlapping roles, and so this can lead to layoffs. Some of the employees who have redundant positions may need to be let go simply because they’re not necessary.
Why would this happen?
Every situation is unique, but redundancy may be nearly unavoidable for some positions. When the companies were independent entities, they both had to have someone in that position. But after the merger, one employee can easily handle the job on their own, so there’s no need for two people to be employed in the same position.
For example, say that two companies have accounting departments that are roughly the same size. The merger is going to expand the overall company, but they only need to keep 50% of the other accounting department. There’s no need to double its size, and things can run more efficiently with a smaller team. It’s not that those in the previous accounting department have made any mistakes or done anything wrong, but their positions could be cut just because there’s no reason for multiple people to be doing the exact same job.
This is just one example, but it can lead to some employment questions during mergers and acquisitions, so it’s important for those involved to understand their legal rights.