Due diligence zaměstnanců při prodeji firmy nebo akvizici

Why is employee due diligence a critical part of every transaction?

When buying a company, attention is usually focused on financial results, asset value, and market position. Yet, employees represent one of the riskiest factors of the entire transaction. According to studies, 70–90% of acquisitions fail precisely due to poor integration of human resources. The reason is often the underestimation of labor law risks, cultural differences, or the loss of key employees. We discuss the specifics of employee transfer during the transfer of an undertaking or part thereof in the article when an undertaking or division is transferred.

Employee due diligence reveals hidden risks that are not apparent in financial statements at first glance. Unresolved labor disputes, invalid contracts, or deficiencies in OHS documentation can cost the buyer hundreds of thousands to millions of CZK in fines, severance pay, or litigation.

When evaluating these risks, specialization in labor law is typically applied, especially in reviewing employment contracts, internal regulations, and OHS documentation. The Prague-based ARROWS law firm regularly handles cases where clients underestimate the legal due diligence of employees and subsequently face unexpected costs.

HR due diligence is one of several areas examined before a transaction. What the entire due diligence during a company acquisition looks like is described in a separate guide.

The automatic transfer of rights and obligations under Section 338 of the Labor Code means that the new employer assumes all obligations towards employees – including unpaid wages, benefits, lawsuits, or debts to social security institutions. If the selling company owed employees wages for the last three months, for example, these obligations automatically transfer to the buyer, regardless of whether they knew about them.

What automatically transfers to the new owner of the company?

Under Czech legislation, employees are protected through the transfer of rights and obligations from labor relations. This transfer occurs by operation of law and does not require the consent of employees or any special actions. Upon the sale of an undertaking or part thereof, the new owner automatically becomes a party to all labor relations.

The following transfer to the new employer:

Employment contracts in full – including all agreed conditions (type of work, place of performance, wage, working hours). The new employer must maintain the same conditions that the employee had with the original employer. A unilateral change is only possible with the employee's consent or within legal grounds. We also discuss the practical impacts of changes in working conditions (including termination of employment in sensitive phases) in the article How to terminate employment during the probationary period without the risk of a lawsuit.

Collective agreements – transfer for the duration of their validity, but no longer than until the end of the following calendar year. Even if the new owner does not have a trade union, they must comply with the collective agreement for the specified period.

All financial obligations towards employees – unpaid wages, compensations, bonuses, unused vacation, or severance pay. If the original employer did not pay employees their wages for January and February and the transaction took place in March, the new owner is obliged to pay these amounts.

Ongoing lawsuits and arbitrations – disputes over the invalidity of termination, unpaid wages, or discrimination transfer to the new employer, who is obliged to settle them.

Non-compete clauses and their financial obligations – if an employee has an agreed non-compete clause with monetary compensation (at least 50% of the average monthly wage), this obligation transfers to the buyer and can last up to one year after the termination of employment.

Benefits and employee programs – meal allowances, supplementary pension insurance, meal vouchers, or training must be maintained by the new employer if they were part of employment contracts or internal regulations.

Liability for damages caused by employees – if an employee caused damage while still with the original employer, but the damage was not settled before the transfer, the new owner also assumes this obligation.

Conversely, claims and obligations concerning employees whose employment ended before the transfer date do not transfer to the new employer. The original employer remains liable for these obligations.

For buyers, this means they must conduct thorough due diligence of all labor relations before signing the contract. Our Czech legal team helps clients identify and quantify all obligations towards employees to avoid unpleasant surprises after the transaction is completed.

Information Obligation: What do you have to tell employees and when?

The Labor Code imposes a clear obligation on both the transferor and the transferee to inform employees about the planned transfer. This information obligation must be fulfilled at least 30 days before the transfer takes effect. Failure to comply with this obligation carries a fine of up to CZK 200,000. We comment on typical errors in internal HR processes, which can also manifest in the fulfillment of information obligations, in the interview Partner of the firm Jakub Oliva for Hospodářské noviny: errors in HR, the greatest risks arise with key people and internal processes.

Employers must inform employees about:

• the reasons for the transfer of the undertaking – why the transaction is taking place and what its strategic purpose is

• the legal consequences of the transfer – how the transfer will affect labor relations, what changes, and what remains

• the economic and social consequences for employees – whether there will be changes in remuneration, benefits, or working conditions

• planned measures in relation to employees – for example, changes in the organizational structure, transfers to other workplaces, or changes in working hours

The information obligation applies to both the transferor and the transferee. The transferor is obliged to inform their employees that a transfer is taking place, while the transferee informs them of what changes await the employees under their leadership.

If the company does not have a trade union or an employee council, the employer must inform the individual employees concerned directly. A written form of delivery of information to each employee personally is recommended to prove that the information obligation has been fulfilled.

Although failure to comply with the information obligation does not affect the validity of the transfer itself, it exposes the company to the risk of fines and disruption of employee trust. Employees who were not informed in time have the right to terminate their employment within two months of the transfer with entitlement to severance pay, provided they prove a substantial deterioration in working conditions.

The ARROWS law firm will help you correctly and timely fulfill the information obligation towards employees. We will prepare complete documentation for you and ensure that the entire process runs in compliance with the law.

What are the risks of incomplete employee due diligence?

Insufficient employee due diligence can lead to a number of problems that manifest only after the transaction is completed. The buyer may encounter hidden financial obligations, lawsuits, or compliance deficiencies that significantly affect the value of the entire investment.

Financial risks associated with employees

Unpaid wages and compensations are among the most common hidden risks. If the selling company owes employees wages, vacation pay, or bonuses, these obligations automatically transfer to the buyer. In the event of the employer's insolvency, the employee can request wages from the labor office, which subsequently recovers the amount from the new owner.

Lawsuits and arbitrations with former and current employees can represent a significant financial risk. Disputes over the invalidity of termination, unpaid wages, discrimination, or mobbing can drag on for years and result in an obligation to pay not only the claims themselves but also court costs and default interest.

Non-compete clauses with financial obligations can be considerably expensive. If a key employee has an agreed non-compete clause, the new employer is obliged to pay them at least 50% of their average monthly wage for up to one year after the termination of employment. For high-ranking managers, this can mean costs in the hundreds of thousands of CZK.

Unresolved severance pay from organizational changes – if the original employer made organizational changes and did not pay severance to employees, this obligation transfers to the new owner. The amount of severance pay ranges from one month's average earnings (employment shorter than a year) up to three times the average earnings (employment longer than 2 years).

Employee benefits and bonuses can be a significant burden on the new owner's budget. If the company provided above-standard benefits (e.g., housing allowances, company cars, premium health insurance), the new employer must maintain these benefits until an agreement on their change is reached with the employees.

Legal and compliance risks

Errors in employment contracts can lead to fines from the labor inspection. The most common deficiencies include vague definitions of the type of work, missing essentials of employment contracts, invalid probationary periods, or failure to fulfill the obligation to provide the employee with written information on working conditions. In 2024, labor inspectorates imposed fines of CZK 469 million, a significant portion of which related specifically to labor law documentation.

Invalid non-compete clauses represent a risk to the protection of trade secrets. A non-compete clause must be agreed in writing, must not exceed one year from the termination of employment, and must include monetary compensation. If any of these conditions are not met, the clause is invalid and the employee can work for competitors immediately after leaving.

Violation of OHS regulations can lead to fines of up to CZK 2 million. Typical deficiencies include missing risk assessments, failure to provide protective equipment, failure to conduct employee training, or failure to report occupational injuries. Upon taking over the company, the buyer becomes responsible for occupational safety and must immediately remedy all identified deficiencies.

Insufficient recording of working hours can lead to fines of up to CZK 400,000. The employer is obliged to keep accurate records of hours worked, overtime, and breaks. If this record is missing or incomplete, the buyer risks sanctions from the labor inspection.

GDPR violations in the processing of employees' personal data can result in fines of up to EUR 20 million or 4% of global turnover. If the company processes employees' personal data unlawfully, has not provided them with information on processing, or has not adopted sufficient security measures, the buyer assumes these risks.

Organizational and personnel risks

The departure of key employees represents one of the greatest risks in acquisitions. Employees who do not agree with the transfer can resign 15 days before the transfer takes effect. If the company loses key experts, product managers, or sales representatives with knowledge of the customer base, it can significantly jeopardize the continuation of the business.

A drop in employee morale and productivity is a common risk associated with uncertainty during the transaction. Employees fear layoffs, changes in working conditions, or incompatibility of corporate cultures, leading to reduced performance and increased turnover.

Incompatible corporate cultures can fundamentally hinder employee integration. If one company promotes a hierarchical structure and the other operates on a self-management basis, the clash of cultures can lead to frustration, conflicts, and the departure of talented people.

Employees' ties to key customers and suppliers can be threatened when a key employee leaves. If a sales representative who maintains relationships with major customers leaves the company, they may take a significant portion of turnover with them.

The ARROWS law firm conducts comprehensive legal due diligence of employees, which reveals all hidden risks before signing the purchase agreement. We will review employment contracts, lawsuits, benefits, OHS documentation, and GDPR compliance. Our experience in providing long-term services to more than 150 joint-stock companies and 250 LLCs allows us to quickly identify problem areas and propose solutions. Contact us at consultation@arws.cz.

What must a complete HR due diligence include?

Quality employee due diligence includes a review of all aspects of labor relations. Its goal is to uncover risks, quantify obligations, and prepare an employee integration strategy after the transaction is completed.

Employee overview and organizational structure

The current list of all employees must include names, job titles, duration of employment, type of contract (employment relationship, agreement on work activity - DPČ, agreement on work performance - DPP), and remuneration levels. This overview helps identify key employees and evaluate total personnel costs.

The organizational structure and reporting reveal how the company is managed and where the critical points are. It is important to identify key positions whose absence could jeopardize the company's operations. These employees must be targeted with retention programs so they do not switch to competitors.

Identification of key person risk – if the company depends too heavily on one or a few employees (for example, a single IT specialist who has access to all systems), this represents a significant risk for future operations.

Employment contracts and amendments

A complete review of all employment contracts is the foundation of HR due diligence. Each contract must contain the type of work, place of performance, and start date. If any of these essentials are missing or vaguely defined, the contract may be invalid and the employer risks a fine of up to CZK 10 million.

Amendments to employment contracts – checking whether all changes in working conditions were properly agreed in writing and whether they meet legal requirements. Unilateral changes in working conditions without the employee's consent are invalid.

Agreements on work activity (DPČ) and agreements on work performance (DPP) – checking whether there is any misclassification of employees as independent contractors (shwarz system) or evasion of mandatory contributions. Illegal work carries a fine of up to CZK 10 million.

Non-compete clauses – checking the validity, scope, duration, and amount of monetary compensation. An invalid non-compete clause can mean the loss of protection of trade secrets and know-how.

Qualification agreements and retention bonuses – verifying whether the company provided employees with training, education, or bonuses on the condition of remaining with the company for a specified period. These obligations can complicate employee departures after the transaction.

Wages, benefits, and financial obligations

An overview of payroll costs, including basic wages, allowances, premiums, and bonuses. It is important to identify unusually high rewards that could signal unofficial agreements or obligations towards key employees.

Checking compliance with the minimum wage and the Labor Code – verifying whether all employees are remunerated in compliance with the law and whether allowances for overtime, night work, or holiday work are correctly paid.

Unpaid wages and compensations – identifying all debts to employees that will transfer to the new owner. The check also includes unused vacation, which must either be taken or financially compensated.

Employee benefits – meal vouchers, contributions to supplementary pension insurance, company cars, mobile phones, healthcare, or multisport cards. These benefits form part of the total personnel costs and the new employer is obliged to maintain them.

Long-term bonus programs and stock options – if the company has programs in place to motivate and retain key employees, it is necessary to assess their conditions and financial impacts. Some programs may have deferred payouts that are activated precisely upon a change of ownership.

Lawsuits and legal risks

Ongoing lawsuits with employees – a complete overview of all disputes over the invalidity of termination, unpaid wages, discrimination, mobbing, or non-compliance with working conditions. Each dispute must be assessed in terms of the probability of success and potential financial impacts.

Complaints and internal investigations – even closed cases can signal a problematic corporate culture or managerial practices. If the company has handled many complaints of sexual harassment or discrimination in the past, there is a risk that similar problems persist.

Fines from the labor inspection – the history of inspections and imposed sanctions reveals whether the company systematically violates labor regulations. Repeated fines for the same type of offense can lead to an increase in the sanction by up to 100%.

Obligations towards insurance companies and the Social Security Administration (OSSZ) – checking whether the company properly remits insurance contributions for employees and has no debts. The new owner is also liable for any arrears incurred before the transfer.

OHS and occupational health and safety

Risk assessment and OHS documentation – every employer must have a risk assessment prepared for all job positions. If this documentation is missing, a fine of up to CZK 2 million may be imposed.

Recording of occupational injuries – checking whether all occupational injuries were properly reported and whether the company adopted measures for prevention. Unreported injuries can lead to fines and increased insurance premiums.

Employee training in OHS – verifying whether all employees completed introductory training and regular refresher training. The absence of training records can lead to sanctions.

Provision of personal protective equipment – checking whether the company provides employees with all necessary protective equipment (gloves, helmets, hearing protection, safety glasses) and whether its use is monitored and documented.

GDPR and protection of employees' personal data

Records of processing activities – every employer must have documented what personal data of employees it processes, for what purposes, and on what legal basis. The absence of this documentation can lead to a fine from the Office for Personal Data Protection.

Informing employees about data processing – checking whether employees were informed about what data the company processes, how long it keeps it, and who has access to it. Upon the transfer of an undertaking, employees must be informed of the change in the data controller within one month.

Security of personal data – checking whether the company has adopted sufficient technical and organizational measures to protect employees' personal data against misuse, loss, or unauthorized access.

Data processing agreements with third parties – if the company makes employees' personal data accessible to external entities (e.g., payroll accountant, recruitment agencies), it must have processing agreements concluded under Article 28 of the GDPR.

Thanks to our experience in providing services to more than 150 joint-stock companies and 250 LLCs, we can quickly identify problem areas and provide practical solutions. We are insured for damage up to CZK 500,000,000, so it is safer for the client to have the matter professionally secured. 

The Prague-based ARROWS law firm conducts complete legal due diligence of employees. We will prepare a detailed report on all identified risks, quantify the financial impacts, and propose a strategy for their resolution.

Identification of key employees

The first step is to correctly identify employees whose departure would have a major impact on the company's functioning. Key employees usually make up 2–5% of the total workforce, but their contribution is disproportionately high.

Key employees include:

• Top managers and department heads who manage critical processes and have a direct impact on company results

• Sales representatives with direct ties to key customers, whose departure could mean the loss of significant contracts

• Technological specialists and developers who hold know-how in products or IT systems

• Production experts without whom production would stop or dramatically slow down

• Specialists with unique expertise who cannot be easily replaced on the labor market

The identification of key employees should be carried out during due diligence so that a retention strategy can be prepared in time.

Retention bonuses and financial motivation

Retention bonuses are the most common tool for retaining key employees during a transaction. Studies show that up to 92% of successful acquisitions used retention bonuses tied to the employee remaining with the company for a specified period.

The typical amount of retention bonuses ranges between 10–25% of the employee's annual wage. For highly specialized or strategically important positions, the bonus can reach up to 30% of the annual salary. The retention bonus should be sufficiently motivating to outweigh the employee's concerns about the change.

The structure of the bonus payout has a major impact on its effectiveness. The most common models include:

• One-time payout after 6–12 months – the employee receives the entire bonus if they remain with the company for the specified period

• Gradual payouts in several phases (e.g., 50% after 6 months, 50% after 12 months) – reduces the risk of the employee leaving immediately after receiving the bonus

• Tying to performance or milestones – the bonus is paid not only for remaining but also for achieving set goals

Retention bonuses should be agreed upon discreetly to avoid tension between employees who received the bonus and those who did not. It is recommended to conclude written agreements on the provision of the bonus with clear conditions and payment dates.

Non-financial retention tools

Money is not the only reason employees stay. Studies show that up to 74% of successful acquisitions used personal communication with key employees, while for unsuccessful transactions, it was only 24%.

Transparent communication is key to maintaining trust. Key employees should be informed about the plans of the new owner as soon as possible, ideally before the transaction is closed. It should be clearly explained to them:

• What role they will play in the new company structure

• What opportunities the change brings for them (career growth, greater responsibility, access to new projects)

• How the integration will take place and what the timeline of changes is

Involvement in the integration process can significantly increase the engagement of key employees. If they get the opportunity to participate in decision-making about the future of the company, their sense of ownership and loyalty increases. They can be part of integration teams, working groups, or advisory boards.

Career perspectives and development opportunities are often more important for ambitious employees than short-term financial incentives. If the acquisition opens up new possibilities – for example, working on international projects, leading a larger team, or accessing more advanced technologies – it is important to communicate this.

Preserving corporate culture and identity where possible. If employees have a strong bond to the brand, values, or way of working of the original company, a radical change can lead to frustration and departures. A sensitive integration that respects the positive aspects of the original culture increases the chance of retaining talent.

Contractual security before the transaction

Non-compete clauses can prevent key employees from switching to competitors immediately after a change of ownership. A non-compete clause must be agreed in writing, must not exceed one year, and must include monetary compensation of at least 50% of the average monthly wage. If the company does not yet have non-compete clauses with its key employees, it is advisable to conclude them before the transaction.

Qualification agreements can financially bind employees to remain with the company for a specified period. If the company invests in an employee's education (e.g., MBA, professional certifications), it can agree that the employee must remain with the company for, for example, 3–5 years, otherwise they are obliged to return the education costs.

Stay agreements are special contracts concluded with key employees that define the conditions of their remaining with the company during and after the transaction. These agreements usually include financial compensation, working conditions, scope of responsibility, and any exit conditions.

The ARROWS law firm will help you prepare a retention strategy for key employees that combines financial and non-financial tools. We will design and negotiate retention bonuses, non-compete clauses, or other contractual security to prevent the loss of key know-how. We also provide our clients with comprehensive legal support during the integration process.

How to correctly inform employees about the transfer of an undertaking?

The information obligation is not just a formal matter – it is a key tool for minimizing legal risks and maintaining employee trust. Poorly executed communication can lead to fines of up to CZK 200,000, departures of key people, and disrupted relations with employees.

Who must inform the employees?

Both parties to the transaction have an information obligation:

The transferor (seller) must inform their employees that a transfer is taking place, what the reasons are, and what the legal, economic, and social consequences will be. The transferor should also state who the new employer will be and what their plans are for the company.

The transferee (buyer) must inform about what changes await the employees under their leadership – whether there will be changes in remuneration, benefits, working hours, or organizational structure.

If a trade union or an employee council operates at the employer, the information and consultation obligation applies to these bodies. If these bodies do not operate at the employer, the individual employees concerned by the transfer must be informed directly.

What must the information contain?

The Labor Code in Section 339 sets out the minimum scope of information that must be provided to employees:

• The date of the transfer or the planned date of effect of the transfer of rights and obligations

• The reasons for the transfer – strategic, economic, or other circumstances that led to the decision to transfer

• The legal consequences of the transfer for employees – that an automatic transfer of labor relations to the new employer is taking place

• The economic consequences – whether and how remuneration, benefits, and working conditions will change

• The social consequences – potential changes in working hours, place of performance, or organizational structure

• Planned measures in relation to employees – for example, changes in benefits, organizational restructuring, or personnel changes

The information should be provided clearly and in sufficient detail so that employees can understand how the change will affect them. General or too vague information does not meet the requirements of the law.

Form and timing of information

Information must be provided at least 30 days before the transfer takes effect. This period is the statutory minimum – in practice, it is advisable to inform employees earlier, ideally immediately after signing the preliminary purchase agreement or letter of intent.

A written form of delivery of information to each employee personally is recommended to prove that the information obligation has been fulfilled. The written form can take the form of:

• Individual letters sent to each employee

• An official notice posted in a visible place, with employees confirming receipt of the information with a signature

• An e-mail with a delivery receipt or read confirmation

In addition to the written form, it is advisable to organize a meeting with employees (town hall meeting), where management personally explains the reasons for the transaction, answers questions, and tries to alleviate concerns. Personal communication significantly increases trust and reduces the risk of misinformation.

What happens in case of non-fulfillment of the information obligation?

Failure to fulfill the information obligation does not affect the validity of the transfer itself – employees transfer to the new employer even without being informed. However, failure to fulfill this obligation has serious consequences:

• A fine of up to CZK 200,000 from the labor inspection

• The employee's right to terminate employment within 2 months of the transfer with entitlement to severance pay, if they prove a substantial deterioration in working conditions

• Disruption of trust between the employer and employees, which can lead to a drop in morale and higher turnover

The ARROWS law firm will help you correctly and timely fulfill the information obligation towards employees. We will prepare complete communication materials, ensure compliance with the law, and help you plan an effective communication strategy. Thanks to our experience, we can prevent problems and minimize the risk of fines or employee departures.

What to do when due diligence reveals serious deficiencies?

If the legal review reveals problems in the area of labor relations, there are several strategies to address these risks and minimize their impact on the transaction.

Remedy before closing the transaction

The best solution is to require the seller to remedy the deficiencies before the transaction is completed. This may concern:

• Updating employment contracts – supplementing missing essentials, specifying the type of work or workplace

• Payment of outstanding wages and compensations – the seller pays all unpaid obligations towards employees before the transfer

• Settlement or resolution of lawsuits – the seller attempts an out-of-court settlement with the suing employees or provides sufficient reserves for potential court expenses

• Supplementing OHS documentation – conducting risk assessments, supplementing missing training, or ensuring personal protective equipment

If the seller makes the remedy, the risks are reduced and the buyer gets a "cleaner" company.

The fundamental difference is whether a share or an undertaking is being sold. When selling an undertaking, rights and obligations transfer to the new employer — we address this in the text about what happens to employees when selling an undertaking.

Purchase price adjustment

If deficiencies cannot be remedied before closing the transaction, it is advisable to negotiate a reduction in the purchase price. The amount of the discount should correspond to the estimated costs of remedy or potential fines and sanctions.

For example, if due diligence reveals:

• Unpaid wages of CZK 500,000

• An ongoing lawsuit with an estimated risk of CZK 300,000

• Deficiencies in OHS documentation with an estimated remedy cost of CZK 200,000

The total identified risk is CZK 1,000,000 and the buyer can request a corresponding discount on the purchase price.

Contractual guarantees and indemnification

The purchase agreement should contain the seller's representations and warranties regarding the state of labor relations. Typical warranties include:

• A warranty that all employment contracts are valid and meet the requirements of the Labor Code

• A warranty that there are no unpaid obligations towards employees as of the transaction closing date

• A warranty that there are no ongoing or threatened lawsuits with employees

• A warranty that the company meets all OHS and GDPR requirements

If it is found after closing the transaction that any of the warranties were untrue, the buyer has the right to indemnification. The purchase agreement should contain an indemnity clause, which specifies:

• The scope of indemnification – what types of damages the seller is liable for

• The timeframe – how long after the transaction the buyer can claim indemnification (typically 1–3 years)

• Liability limits – the maximum amount the seller is obliged to pay

• Basket and cap – the minimum value of damage from which the right to indemnification arises (basket), and the maximum total liability (cap)

Escrow account

To secure claims for indemnification, part of the purchase price can be placed in an escrow account. Typically, this is 5–15% of the purchase price, which is blocked for 6–18 months. If no hidden obligations or problems manifest during this time, the funds are released to the seller. However, if damage arises, the buyer can draw from the escrow account.

Transaction insurance (W&I insurance)

Warranty and Indemnity (W&I) insurance is a specialized insurance that covers risks associated with a breach of warranties in the purchase agreement. The insurance can be arranged by the buyer (buy-side W&I) or the seller (sell-side W&I) and covers damages resulting from untrue warranties.

The insurance can cover, for example:

• Unpaid obligations towards employees

• Lawsuits discovered after closing the transaction

• Fines from the labor inspection or the Office for Personal Data Protection

W&I insurance is particularly suitable for larger transactions where there is a high risk of hidden obligations.

The ARROWS law firm will help you design the optimal strategy for resolving risks discovered during due diligence. We will negotiate a discount on the purchase price for you, prepare contractual guarantees and indemnity clauses, or recommend suitable insurance coverage. We pride ourselves on speed and high quality, so we can effectively protect your interests in the transaction.

When and how to start preparing for employee due diligence?

Preparation for due diligence should begin even before negotiations with potential buyers. If you plan to sell a company, we recommend conducting an internal audit of labor law documentation 6–12 months before the planned transaction. This procedure allows for the timely detection and removal of deficiencies, which increases the company's value and speeds up the entire sales process.

The selling company should:

• Conduct a complete review of all employment contracts and amendments

• Update internal regulations and guidelines

• Supplement missing OHS documentation

• Resolve or at least document all lawsuits and employee complaints

• Ensure GDPR compliance in the processing of employees' personal data

• Create a structured data room with clearly organized documentation

The buying party should:

• Include HR due diligence as a standard part of the overall company review

• Assemble a team including lawyers, HR specialists, and potentially tax advisors

• Prepare a detailed checklist of documents to be requested from the seller

• Plan enough time for the review – haste leads to overlooking risks

• Ensure confidentiality of information through an NDA (non-disclosure agreement)

The ARROWS law firm provides comprehensive legal support in the preparation and execution of employee due diligence. Whether you are on the seller's side and want to prepare the company for sale, or you are a buyer and need to review the labor relations of the target company, our lawyers will help you minimize risks and ensure a smooth transaction.

With more than 150 joint-stock companies and 250 LLCs in our portfolio, we have extensive experience with M&A transactions and labor law issues. We are insured for damage up to CZK 500,000,000, so it is safer for the client to have the entire matter professionally secured. We are also commonly partners to in-house corporate lawyers for resolving special matters.

Thanks to our ARROWS International network, which we have been building for ten years, we can provide legal services even in cases with an international element. We handle cases crossing the borders of the Czech Republic practically on a daily basis.

Furthermore, if you are looking for M&A financing or a business partner for buying or selling, we can connect you with relevant entities from our portfolio. We are happy to hear interesting business ideas.