Business & Commercial Due Diligence Solicitors
Employees
One of the most crucial parts of any business is the staff. When a business is sold, the general rule is that the buyer takes on all the employees on exactly the same terms as they had before the business was sold.
As a matter of course, therefore, we would examine their Contracts of Employment thoroughly and ask various questions to give us (and you) a full picture of their employment rights, including the wages or salary (and any perks) that they’re entitled to receive.
The Buyer can then decide if he is prepared to take on those employees when he takes over the business. If he does not want to retain some or all of the employees, the Seller will usually be asked to terminate their employment, which may entitle the employees to compensation.
As experienced business Solicitors, we are often involved in delicate negotiations regarding employees and whether the Buyer or the Seller is prepared to agree a compensation package with those employees. Once agreement has been reached, the employee(s) will be asked to sign a document called a COMPROMISE AGREEMENT which gives them an agreed amount and stops them taking the employer to an Employment Tribunal.
Some people who work in the business may not in fact be “employees” and therefore would not be entitled to compensation e.g. self-employed people who provide a service to the business and other businesses.
It’s crucial therefore to establish exactly who is an employee and who isn’t – even though people may be doing the same job – as different rules apply.
We also delve into some details of their employment history with the business including making enquiries as to their sickness and disciplinary records, and how long they have been employed in the business. This is important for calculating how much compensation they would be entitled to receive in the future if the Buyer decides to terminate their employment some time after he’s bought the business.
We will also enquire as to their qualifications and whether they have been approved to do the job they’re being paid for. For example, we would want to know if care workers in a care home had received clearance from the Criminal Records Bureau.
Also, on completion of the sale, we would advise how to split wages between the period before completion (usually the Seller’s responsibility) and the period after completion (usually the Buyer’s responsibility).Call Business Lawyers Direct today on or contact us via our online enquiry form and one of our senior solicitors will be pleased to discuss your requirements.
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