Forvis Mazars: Employee transfer risks in M&A transactions: which employment-related costs could the new employer inherit?

• Failure to report employee transfers may result in fines of up to RON 8,000, while inaccurate reporting can attract penalties of up to RON 6,000.
• Along with the employees, the buyer also assumes the related obligations and any potential non-compliance issues existing at the transfer date.
• Unjustified pay differences for equal work or work of equal value may lead to remediation costs, litigation and reputational risk.
• The first 100 days following a transaction are critical for managing the risks identified during the due diligence process.

Earlier this year, the Investing in CEE: Inbound M&A Report 2025/2026 study, produced in collaboration with Mergermarket, highlighted the resilience of the Central and Eastern European mergers and acquisitions (M&A) market despite economic and geopolitical uncertainties, as well as investors’ growing focus on premium assets. Romania remained one of the most active M&A markets in the region, confirming both the maturity of the local market and its attractiveness to investors.

Beyond market dynamics and the completion of a transaction, a significant portion of its value is created during the post-transaction integration phase. Employee transfers represent one of the areas where the buyer may inherit exposures that are not always visible at the time of acquisition. Along with the workforce, rights and obligations related to employment relationships are transferred, and any existing non-compliance issues may subsequently translate into legal, financial and operational costs for the new employer.

In this context, Forvis Mazars specialists have identified six risk areas that should be assessed as early as the due diligence stage and prioritised throughout the implementation and integration process. These range from the accuracy of employee data and the assessment of workforce transfer implications to contractual provisions, information and consultation obligations, and, increasingly, matters related to pay equity and pay transparency.

“Based on our experience with integration projects, most challenges related to employee transfers arise during the implementation phase. Within a relatively short timeframe, large volumes of data, employment contracts, payroll elements and benefits must be aligned, often across different systems and processes. In this context, even seemingly minor discrepancies can multiply when they affect dozens or hundreds of employees. This is why, for HR and payroll teams, transfer preparation, data validation and close coordination among the functions involved are essential to reducing operational risks during the integration stage”, said Anca Lamba, Senior Manager, Outsourcing – HR & Payroll, Forvis Mazars in Romania.

1. A reporting error can become a company-wide risk

Employee transfers involve strict reporting obligations, and the transferee must register the transfer and its own employer identification details in the General Register of Employees within a maximum of five working days from the transfer date. Failure to meet this deadline may result in fines of up to RON 8,000.

However, in a transaction involving the simultaneous transfer of a large number of employees, the risk can extend far beyond a simple administrative error. Employee data is often consolidated from different systems and managed by multiple teams, including HR, payroll and legal, meaning that a single process breakdown can be replicated across the entire transferred workforce.

• Inaccurate or incomplete data can become a compliance risk

Meeting reporting deadlines is only one of the new employer’s obligations. The accuracy of the information submitted is equally important, and reporting incorrect or incomplete data may result in fines ranging from RON 3,000 to RON 6,000.

The risk increases during the integration phase, when information from employment contracts must be reconciled with data held in the HR and payroll systems of both organisations. Discrepancies between databases, incomplete information, or repeated errors during the migration process can lead to compliance issues that are difficult to detect internally and may ultimately come to light during inspections conducted by the Labour Inspectorate.

• Buyers may also inherit non-compliance risks embedded in employment contracts

Employment contracts are transferred under the principle of continuity. However, this does not automatically mean that all contractual provisions remain fully compliant with current employment legislation. Contracts signed at different points in time, legislative changes introduced over the years, or differences between the policies of the two organisations may mean that certain clauses require review and alignment.

Including provisions that conflict with applicable legal requirements may result in fines ranging from RON 2,000 to RON 5,000. Following the transfer, responsibility for addressing such non-compliance rests with the new employer, even when the underlying issues pre-date the transaction. As a result, a careful review of employment contracts during the due diligence process can provide valuable insight not only into the current state of employment relationships, but also into potential remediation costs that the buyer may ultimately inherit.

• Failure to inform and consult employees may create both legal and operational risks

In the case of a business transfer, legislation requires employees or their representatives to be informed and consulted about the legal, economic and social implications of the transaction at least 30 days before the transfer date. Failure to comply with these obligations may result in administrative fines ranging from RON 1,500 to RON 3,000.

However, the impact can extend well beyond the value of the fine. At a time when employees are already facing the uncertainty associated with a change of employer, insufficient or delayed communication can undermine trust in management and increase the risk of losing key talent. As a result, information and consultation processes should be viewed not only as compliance requirements, but also as important components of integration risk management.

• An employee transfer does not “reset” employment relationships: existing obligations remain with the new employer

One of the most significant risks for buyers stems from the very principle of continuity of employment relationships. The rights and obligations in place at the transfer date are assumed by the transferee, meaning that the transaction does not provide a “reset point” for employment terms and conditions.

The transfer may include salary-related entitlements, benefits and other contractual or collective obligations, while the transfer itself cannot serve as grounds for terminating individual employment contracts. Consequently, any differences between the policies and practices of the two organisations should be assessed before integration, and any harmonisation process must be carefully planned and implemented within the limits of the applicable legal framework.

For buyers, the key challenge is therefore to understand, before the transaction is completed, not only how many employees they are acquiring, but also the full scope of the obligations that come with them.

• Pay inequities can become a transaction cost

Against the backdrop of new European pay transparency requirements, buyers should consider a risk factor that is becoming increasingly significant in M&A transactions: existing pay inequities within the acquired organisation and its ability to objectively justify pay differences.

The EU Pay Transparency Directive (EU) 2023/970) extends well beyond gender pay gap reporting and places the spotlight on the design, governance and documentation of remuneration systems. As a result, job architecture and classification frameworks, salary structures, pay-setting criteria and the documentation underpinning pay decisions are becoming increasingly relevant not only from a compliance standpoint but also as part of M&A due diligence and integration processes.

Under certain conditions established by the Directive, a gender pay gap of 5% or more between female and male employees performing equal work or work of equal value that cannot be justified by objective and gender-neutral criteria may trigger additional obligations for assessment and remediation.

For buyers, the implications are clear: vulnerabilities that exist at the time of acquisition can later evolve into tangible costs, including salary adjustments, remediation of pay systems, employee claims, litigation, compensation payments and reputational damage. As a result, HR due diligence should also evaluate the target company’s readiness to comply with the new pay transparency requirements.

“Pay transparency is reshaping how remuneration is assessed in M&A transactions. It is no longer enough to understand payroll costs at the time of acquisition; buyers also need to understand how those costs were determined, whether pay differences can be objectively justified and how robustly the remuneration framework is documented. A vulnerability identified after the acquisition may trigger not only compliance obligations, but also salary adjustments and remediation costs that were not factored into the original transaction assessment”, mentioned Florina Ilie, Senior Manager, HR & ESG Advisory, Outsourcing – HR & Payroll, Forvis Mazars in Romania.

The draft legislation transposing the Directive is still under parliamentary review, and the 7 June 2026 transposition deadline has already passed. In its current form, the bill proposes fines ranging from three to five gross minimum wages, increasing to five to ten gross minimum wages for repeated breaches, as well as a general three-year limitation period for pay discrimination claims.

Although the final provisions may change before enactment, Romania’s obligation to implement the Directive means that pay transparency readiness is already a relevant factor in the assessment of M&A transactions. Importantly, administrative fines represent only a fraction of the potential exposure. The financial, operational, legal and reputational consequences associated with pay-related non-compliance may prove far more significant for buyers in the long term.

The cost of integration may far exceed the value of regulatory fines

The risks associated with employee transfers extend far beyond regulatory penalties. An inadequately planned integration process can lead to payroll errors, operational disruptions, additional costs related to the alignment of systems and procedures and even the loss of key talent. Differences in HR policies, compensation frameworks and benefits packages may further contribute to perceptions of inequity, ultimately affecting employee trust and engagement within the new organisation.

The first 100 days following the completion of a transaction are therefore critical for turning the risks identified during due diligence into concrete integration priorities. Reviewing employment contracts, validating and migrating employee data, aligning HR and payroll processes and preparing for the new pay transparency requirements enable buyers to address inherited exposures early and reduce potential remediation costs down the line.

As a result, incorporating these considerations into the post-transaction integration plan becomes an important component of protecting the long-term value of the acquisition.

About Forvis Mazars

Forvis Mazars Group SC is an independent member of Forvis Mazars Global, a leading professional services network. Operating as an internationally integrated partnership in over 100 countries and territories, Forvis Mazars Group specialises in audit, tax and advisory services. The partnership draws on the expertise and cultural understanding of over 40,000 professionals across the globe to assist clients of all sizes at every stage in their development.