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Case: Outsourced Payroll is an Advantage in Strategic Business Transitions

Payroll Services Alliance 15th Jul 2013

These days, companies are growing and shrinking like accordions. The below real business case illustrates in what a comfortable situation the HR department can be by partnering with an external payroll provider in case of a strategic business transition.

What was the commercial point of departure? Company A, a national telecom provider, has decided to outsource their technical field activities (construction and maintenance of mobile antennas) to a company B, specialized in that field and serving several telecom providers in Switzerland. During the negotiation period already it was clear that as a consequence of such outsourcing deal, the employees working in the departments in scope would be subject to a transfer of undertaking. Such a transfer of undertakings is subject to special legal rules defined by the Swiss Code of Obligations.

Company A is a customer of Trianon since several years for payroll, pension fund administration and personnel insurances and has informed Trianon’s Key Account Manager in time about the upcoming changes. The overtaking company B was not yet a Trianon customer by that time. Company A’s Head of Human Resources has given company B’s HR Project Manager the contact details of the Key Account Manager.

After a first e-mail contact, the company A HR Project Manager and Trianon’s Key Account Manager for company A met for an analysis and planning meeting in early summer. As a first thing, the current HR structure and resources in company B was discussed. A small team of 2 persons was in charge of all HR duties for 150 employees, payroll was outsourced to a small regional fiduciary company. It was obvious, that nor the HR team nor the fiduciary company would be in a position to handle the transition of 300 new employees without jeopardizing the ongoing operational HR business. The HR Project Manager being a foreigner was not familiar with the country specific payroll and payroll related processes and had a generic knowledge only about the Swiss law which grants grandfathering rights to transitioning staff. In addition, during that first meeting, facts were listed, the critical issues outlined and possible approaches discussed. After the meeting, the Key Account Manager, himself a former HR director, has drafted and submitted a road map for the HR part of the business transition taking into account the grandfathering rights as well as the mid-year date for the transfer of undertaking.

The roadmap outlined the following corner stones:
– List of employee data that company A would be allowed to deliver to company B and should form part of the business transition agreement
– Solution description and commercial offer for outsourced payroll services for company B’s new employees starting mid of the current year ensuring that all legal requirements were respected
– Solution description and commercial offer for a temporary pension fund solution for the employees to transition from company A to company B
– Solution description and commercial offer for the use of e-payslips and an absences module within Trianon’s Employee Benefits Centre to replace the current paper process by an electronic workflow
– Commercial offer for transition support

During a second meeting, the proposed roadmap was fine-tuned and integrated into the HR Project Manager’s overall planning. Based on that “blueprint” a verbal commitment could be obtained and it was decided to work together in the future.

As a result, Trianon could support the HR Project Manager as well as the HR teams of company A and B with the following services.
– Trianon has delivered a report with relevant data of the employees in scope to Head HR company A to allow him listing the type of data to be transferred at a later stage to HR company B in the Addendum of the Business Transition Agreement and forwarding the data to company B after signing for the Agreement
– The HR Project Manager of company B had planned several information meetings and also a set of One to One sessions with each employee planned to transition. Trianon has prepared for those meetings individual employee master data sheets. The documents were distributed during the sessions to each employee who was requested to complete the sheet by the information that company A was for legal reasons not entitled to transfer to company B (e.g. bank account details).
– A payroll set up project was initiated with the aim to deliver payroll services to population joining company B as per transition date. The employee data from the joining population’s individual data sheets were added to the payroll system and test runs were made.
– A separate administrative project was launched to issue the new employment contracts for all employees transitioning to company B.
– As part of the consulting services, Trianon was supporting the HR Project Manager in the Compensation & Benefits due diligence process in order to grant legal compliance in the transition of undertaking. The result was a “temporary” personnel regulations for the transitioning population forming part of the new employment contract.
– Company B has signed an affiliation contract to Trianon’s Collective Foundation for the employees in scope allowing the continuation for a limited period of time of a pension plan identical to what they used to have with company A. By avoiding a change in the pension plan, the new C&B package under company B turned less sensitive and was well perceived.

As a result of all the listed projects and activities, the HR team of company B was substantially disburdened and the HR Project Manager was happy to report a signing rate of more than 95% of the population in scope. Company A had a minimum of work as the knowledge regarding Terms&Conditions and Benefits could be delivered to company B by Trianon’s payroll specialists.

During Q 4 of the same year, Trianon has launched a new payroll set up project in order to provide payroll services also for all the former employees of company B as of January 1st.

Currently, Trianon is in a “normal” operational mode with company A and company B. Trianon could acquire a new customer and at the same time satisfy its needs in a challenging transition project by bringing in additional resources and knowledge.

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