Telling your staff you’re selling up, our advice on TUPE

Just like your regular customers, your staff are probably one of your most valuable assets so it’s often a tough decision when it comes to telling them about the sale of your business, especially if you’re a hands on type of business owner.

It’s a common belief that telling staff you’re planning to sell up shop before a transaction is complete could endanger your sale. Ultimately, as the owner of your business, it’s your decision as to whether or not your staff are kept up to date. Some owners choose to consult staff before and some choose to keep a confidential sale throughout. There are both positive and negatives to both options.

It’s natural to worry about your staff leaving once they hear you’re selling however it’s important to remember that given job security can be assured, members of staff won’t have reason to leave your business.

Have you considered the true value of your staff?

Many prospective business owners will find the thought of taking over a brand new venture a daunting one. Including well informed, experienced and supportive staff with your business sale will help place a much higher value on your business than it would without them.

We recently heard from ex-business owner Ray Boycott who successfully sold his business along with staff to a new owner.

“Honesty was the best policy, it’s especially hard to keep secrets especially with viewings and if you want to market your business as effectively as possible.”

Retirement and your responsibilities to your employees: TUPE

If you have employees and are selling your business, you’ll need to abide by TUPE  (Transfer of Undertakings Protection of Employment) Regulations 1981). It may sound daunting but following the guidelines and principles set down under the regulations are fairly straightforward. TUPE is not only your responsibility as the business seller, but also the buyer’s too. It provides a level of protection for your employees and gives them peace of mind. That can buy you extra loyalty and support during your transition from business owner to retirement.

It doesn’t matter what size of business you are. As long as you have employees you need to consider the implications of TUPE at every stage. In order to help you understand the basics we’ve distilled the key areas for you to be aware of:

I’m selling my business, isn’t the buyer’s responsibility?

Yes it’s the responsibility of both sides. This includes where another company buys another (not by share transfer), where a sole trader or partnership transfers to another and where two companies merge and cease their original status.  More importantly for our readers is where goods and/or services are transferred e.g. a sale of a business.  From businesses carried out on site through to mobile services such as cleaning or catering businesses for example. All of the above means that the purchaser and the seller have a responsibility to the employee.

Here is an example from https://www.gov.uk/transfers-takeovers/overview

Example

A courier collects and delivers for a business, but the packages are picked up or delivered by a number of different couriers on an ad hoc basis. The courier isn’t protected under TUPE.

A cleaner is employed by a company that decides to use an outside cleaning company instead. They’re likely to be protected under TUPE.

Informing your employees

You have to tell your employees (and trade union if appropriate) the following:

  • The transfer is happening – when and why is important. Not just from a legal point of view but also for good relations going forward
  • Tell them how it may affect them (if at all)
  • Let them know of any known re-organisation (the new owner will have to do the same)
  • Reassure them of the TUPE principles
  • Be conscious of agency workers and their rights

If you fail to do this you can be fined.

If you don’t have a trade union, employee representatives can be nominated and elected by their peers. Employee representatives have the same rights as a trade union representative. This can be rather scary but in actual fact could protect you in the long run.

Employers with less than 10 employees can inform and consult directly with employees if there arent any appropriate representatives and the transfer will take place on 31 July 2014 or later.

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