Post-merger, can they change my benefits?

posted in: Job Doc Blog | 0

Q: I was hired by Company A two years ago as a Sales Executive.  In January, we were acquired by Company B.  At first, nothing changed.  Now though all of our benefits are changing.  We just were notified that Company A’s benefits offerings are evaporating and the benefits offered by Company B will be our new benefits.  The new benefits plan is not great compared to our old plan.  I also have heard that our compensation plan may be changing.  I feel like my new employer, Company B, runs very lean and doesn’t care about us as employees.  I was promised specific benefits when I was hired.  They were outlined in my offer letter, which I still have.  Can they just change things like benefits and compensation with no regard for our old plans?

A: Change is hard for most of us.  Company mergers and acquisitions are rarely perfect unions.

When one company acquires another company, change is inevitable.  Changes, as a result of a company acquisition, can be small, like a new email address or more significant, like a change in compensation.

When you are offered a new role, most companies issue offer letters that detail a new employee’s title, compensation, start date and other information.  However, during the course of employment, there may be positive changes which could change that information.  You may have received a promotion, a raise or a title change.  Change can sometimes be good.

It is expected for companies to change benefits periodically.  Employers often evaluate their benefits plans, trying to balance the rising costs with the goal of still being competitive.

In most communications about benefits and compensation, employers include language about how  they may change benefits periodically.  Most employers try to give employees some notice before making a large scale change. Even without a company merger, most companies evaluate their benefits offerings at least annually.

Some organizational change experts view negative changes post-merger as a violation of the “psychological contract.”  The “psychological contract” is the relationship between the employer and its employees, more specifically about expectations regarding the relationship.  This contract is usually unwritten and fairly informal.  For example, if I work hard, put in extra effort and travel as needed, I will be rewarded.  There may be no document which details this expectation but it is a commonly shared belief within a company.

In short, most companies can change employee benefits and compensation plans, if there is no collective bargaining agreement.  However, employers who are smart and thoughtful implement changes in planned way.

Pattie Hunt Sinacole is a human resources expert and works for First Beacon Group in Hopkinton, an HR consulting firm. She contributes weekly to Jobs and the Boston Sunday Globe Money & Careers section.