IBM buys HashiCorp for $6.4B: Employee rights

IBM is buying San Francisco-based HashiCorp for $6.4 billion, as announced during IBM’s Q1 earnings call on April 24. The deal is expected to close by the end of 2024.

The acquisition aims to enhance IBM’s hybrid cloud, multicloud, and AI portfolio. IBM plans to leverage HashiCorp’s resources to develop a comprehensive end-to-end cloud platform.

Details

HashiCorp produces the HashiCorp Cloud Platform, which includes lifecycle management and security features and supports integration with major cloud providers such as Google and AWS.

• The acquisition will allow HashiCorp to access a broader customer base and collaborate closely with IBM on multicloud automation deployments.
• IBM highlighted HashiCorp’s Terraform as “the industry standard for infrastructure provisioning” in hybrid and multicloud environments.
• This acquisition allows IBM to gain HashiCorp’s expertise in cloud infrastructure and applications.
• HashiCorp will retain its brand name and operate as a division of IBM Software.

Official statements

• IBM Chairman Arvind Krishna: “IBM’s and HashiCorp’s combined portfolios will help clients manage growing application and infrastructure complexity and create a comprehensive hybrid cloud platform designed for the AI era.”
• HashiCorp CEO Dave McJannet: “IBM’s leadership in hybrid cloud along with its rich history of innovation, make it the ideal home for HashiCorp as we enter the next phase of our growth journey.”

Who pays severance if IBM doesn’t keep certain HashiCorp employees?

If IBM’s acquisition of HashiCorp results in HashiCorp employees losing their jobs, the responsibility for providing full severance pay typically lies with HashiCorp, the “seller” of the business.

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Should IBM provide you with an employment offer that you have a valid reason to decline (e.g., different hours or pay), you may be entitled to full severance from HashiCorp. Even without a valid reason, you can still receive severance, although it’s very likely that you will only receive your minimum entitlements.

WATCH: Employment lawyer Lior Samfiru explains the rights workers have when their employer sells the business on an episode of the Employment Law Show.

LEARN MORE
• Employer sold the business in B.C.? Know your rights to severance
• Rights to severance in Alberta when your employer sells the business
• Sale of business in Ontario: Rights to severance

How is severance pay calculated?

Severance for non-unionized employees in Canada can be as much as 24 months’ pay.

This includes individuals working full-time, part-time, or hourly in B.C., Alberta, and Ontario. The amount of compensation you are entitled to is calculated using several factors, including:

To figure out how much you could be owed, use our firm’s free Severance Pay Calculator. It has helped millions of Canadians determine their severance entitlements.

If your company doesn’t provide you with the correct amount, you have been wrongfully dismissed and should seek legal counsel immediately. Samfiru Tumarkin LLP regularly resolves wrongful dismissal claims and can help you secure proper severance.

LEARN MORE
• Severance for provincially regulated employees
• Rights to severance for tech sector staff
• Severance packages in mass layoffs

Can IBM make major changes to the jobs of HashiCorp employees?

In Canada, non-unionized employees don’t have to accept substantial changes to their job that IBM might try to enforce. Major modifications, such as a demotion, longer shifts, or reduced pay, are illegal.

When significant adjustments are made to the terms of your employment without your consent, there is a very good chance that you can treat it as a constructive dismissal. In this situation, the law allows you to quit your job and pursue full severance pay.

If you believe that you have been constructively dismissed, don’t resign before contacting our firm.

ADDITIONAL RESOURCES
• Changes to your employment in B.C.: Your rights
• Job changes in Alberta: What employees need to know
• Can my employer make changes to my job in Ontario?

New employment contracts for HashiCorp staff

If you work for HashiCorp and you receive a new employment contract, take the time to carefully review it before signing it. In many cases, these agreements take away key protections that would otherwise be available to non-unionized employees, including:

• Eliminating past service: The new owner might attempt to reduce or eliminate your years of service with your previous employer. Don’t sacrifice your seniority. Length of service is a key factor when determining how much severance pay you are entitled to.
• Reducing severance pay: Some employers try to use a termination clause to reduce your severance entitlements to the bare minimum. Instead of months of pay, you might only receive a few weeks’ pay if you are fired without cause or let go.
• Ability to make changes: The new owner might attempt to add a clause that gives them the right to change aspects of your job (i.e. hours or pay) without your permission or lay you off without penalty.

Employers in Canada can’t legally force non-unionized workers to sign a new employment contract immediately or a few days after receiving it.

SEE ALSO
• Starting a new job? Here’s how an employment contract could limit your rights
• Employment Law Show: 5 things to know about employment contracts
• Employment Law Show: Things to never do before seeking legal counsel

Do employees still have the same workplace rights with a non-Canadian owner?

Yes. Foreign-based companies must adhere to either provincial or federal employment laws, depending on the province where the employees work and the industry the employer operates in.

Received a job offer? Speak with an employment lawyer

Before accepting a new employment contract, have the experienced employment law team at Samfiru Tumarkin LLP review the agreement to make sure your workplace rights are protected.

Our lawyers in B.C., Alberta, and Ontario have successfully represented tens of thousands of non-unionized individuals.

We can help you better understand the terms of the contract and advise you on how best to navigate the situation.