Business sold to new owner without notice

[chickenlady]

Hi - looking for a bit of advice for a relative.
The relative's employers sold their business (100 odd employees) to a big corporate making a very tidy profit of some £5.5million each. One of the reasons my relative took the job there was that it wasn't a big firm.
The previous employers did not consult with any staff prior to the sale and just announced it - finalised - in a staff meeting. Can they do this? I thought there was supposed to be some sort of consultation?
If they do not consult with the staff, is there any compensation and if so, how does my relative go about claiming it?
Thank you for your help.

 

[Paul Kelly ICHYB]

Google can be a great help:

https://www.gov.uk/transfers-takeovers/consulting-and-informing

 

[Newchodge]

It is a breach of TUPE. They speak to their trade union about taking action.

 

[Ian J]

If they do not consult with the staff, is there any compensation and if so, how does my relative go about claiming it?

Compensation for what? If your relative still has her job then nothing has changed from her employment point of view

 

[chickenlady]

I did Google and read through the whole of the TUPE regulations. Employers can apparently be penalised and employees can be made an award of pay but how they go about this is not clear - who do they approach, the new owners or the old owners who are now employees? I'm sure the corporate would have known the old owners should have been consulting, but how did the old owners not know? If they did not know, is it possible they took no legal advice (blinded by £ signs I guess) and could that have implications for staff? There's bound to be some re-organisation as seen in a number of other, similar buy outs by the same corporate.

Yes Ian J, the job is still there but it is now part of a big corporate. Jobs were offered by the same corporate before taking the present position and refused because they were corporate - didn't want to work for them then, nor now partly because of the way they treat their staff. There will undoubtedly be changes to the pension scheme which is allowed under TUPE. Yes a new job can be sought but would have to move out of the area where a house has been purchased in the last couple of months. Why shouldn't there be some compensation? Its no longer what was signed up for.

 

[Mr D]

Hi - looking for a bit of advice for a relative.
The relative's employers sold their business (100 odd employees) to a big corporate making a very tidy profit of some £5.5million each. One of the reasons my relative took the job there was that it wasn't a big firm.
The previous employers did not consult with any staff prior to the sale and just announced it - finalised - in a staff meeting. Can they do this? I thought there was supposed to be some sort of consultation?
If they do not consult with the staff, is there any compensation and if so, how does my relative go about claiming it?
Thank you for your help.

Can they do this? yes by the fact they have done it.
Should they have done things differently? Possibly.
Will it make any difference to the job she does? Maybe not.

Not sure 'I only want to work for small businesses' would be something the owners could have done anything about.
Still if its a major issue there's tons of smaller businesses about she can find work in.

 

[Newchodge]

As I said, speak to their trade union. The action will be against the new owners.

 

[Prime81]

we have the opposite at work where the big corporate sold off one part of the company to a smaller business. Everyone has their jobs and are being TUPED over. We were made aware this was all happening but we didn't have a choice in the matter. So whether they are consulting or not your relative can't really do anything about it.

 

[chickenlady]

As I said, speak to their trade union. The action will be against the new owners.

There is no union - it is a professional body (they said, oh dear, they shouldn't have done that) and an extremely specialised professional field so limited opportunities in the geographical area. Interesting that it is against the new owners - thanks for that.

 

[chickenlady]

we have the opposite at work where the big corporate sold off one part of the company to a smaller business. Everyone has their jobs and are being TUPED over. We were made aware this was all happening but we didn't have a choice in the matter. So whether they are consulting or not your relative can't really do anything about it.

I suppose the purpose of consulting is that it reassures everybody - people are not presently reassured because of the corporate's reputation and precedent shows it is highly likely there will be changes down the line.

 

[Mr D]

I suppose the purpose of consulting is that it reassures everybody - people are not presently reassured because of the corporate's reputation and precedent shows it is highly likely there will be changes down the line.

In pretty much every business there will be changes down the line. Businesses do not usually get to stand still, with the exception of the ministry of funny walks.

If working for the new employer is so bad then need to leave and find another job.
No job is worth being unhappy at work for. Tons of jobs around - be happy or not be happy. No one else can make things better and employees usually don't get to decide if a business they don't own is sold or not.

 

[pentel]

Sounds like it is time to look for a new job to me...

 

[Prime81]

as long as all the jobs and contracts stay the same that's the most they can hope for If these change you can get them into trouble. the sick pay has changed at my work as it was more a policy that contract based so there is some grey area. Everything else is changing for us such as location, bigger team with strangers from other parts of the new company. We are kept in the dark for most things.

 

[The Byre]

I suppose the purpose of consulting is that it reassures everybody - people are not presently reassured because of the corporate's reputation and precedent shows it is highly likely there will be changes down the line.

This is Britain and in Britain the employees do not get a say in anything managerial!

In most other North-Western EU countries, the creation of a board of governors is mandatory above a certain size and the board has to also contain members taken from the workforce. Such representatives can become chairman and even CEO if voted for by the other members. I was talking to the CEO of Lufthansa back in 98 and he was just such a case. He began his career as shop-steward in the engineering dept.

 

[John Hemming]

It is a breach of TUPE. They speak to their trade union about taking action.

I would have thought TUPE would only apply if the employer changes. If the employer is a limited company and the shares in that company are sold by A to B I would think that the employer remains the same and hence there is not a TUPE transfer.

 

[Mr D]

This is Britain and in Britain the employees do not get a say in anything managerial!

Good thing too.

Cannot recall anything my old union ever supported that management wanted to do. Quite a number of things the union had strike action on - that happened anyway.
Modernisation not really welcomed by unions in my experience.

 

[ruby123]

I would have thought TUPE would only apply if the employer changes. If the employer is a limited company and the shares in that company are sold by A to B I would think that the employer remains the same and hence there is not a TUPE transfer.

John is correct, if it was a share sale then the employer is the ltd company therefor it is not tupe and no need for consultation

 

[Newchodge]

I would have thought TUPE would only apply if the employer changes. If the employer is a limited company and the shares in that company are sold by A to B I would think that the employer remains the same and hence there is not a TUPE transfer.

If that is the case, but the description was 'sold their business'. That would be TUPE

 

[Clinton]

It is a breach of TUPE. They speak to their trade union about taking action.

As John Hemming says, TUPE is not involved if it's a share sale. TUPE applies where there is a transfer of an undertaking (or part of an undertaking) to another person, whether affected by sale or by some other disposition (other than by the sale of shares).

I've covered share sales vs asset sales here.

So it needs to be an asset sale to come under TUPE. But even here there are exceptions. Where there is the transfer of just a contract, for example, that's an asset sale but TUPE doesn't apply. Similarly, where there is a sale of assets but no TOGC (transfer of a going concern) TUPE wouldn't apply.

Added:

If that is the case, but the description was 'sold their business'. That would be TUPE

"Sold their business" doesn't mean asset sale. If anything I would read it as a share sale because in an asset sale it's not the owner selling anything, it's the business that's selling its assets.

 

[Mr D]

If that is the case, but the description was 'sold their business'. That would be TUPE

How many non business owners think of the differences between types of sale?

 

[fisicx]

Do you really think the board of directors was going consult with the workforce about the proposal? Of necessity these things are often kept very quite so as to not affect the value of the business.

Your friend still has a job, the contract hasn’t changed. The only thing different at the names of the directors. The fact these are part of a large corporation is irrelevant. Nobody cares except your friend.

 

[ecommerce84]

I’m not sure of the resentment from the OP towards the business owners.

Businesses don’t obtain that sort of value overnight, no doubt the owners will have put a lot of money in, countless hours and risked a lot to build the business up to that size.

Every business owner will have some kind of exit plan - I would imagine most is ‘sell it for as much as possible’ but it doesn’t work out that way for everyone.

Fair play to the owners for getting a deal done and making a few million out of it in the process.

Hopefully the new owners will continue in the same vein and your friend will continue to enjoy their work. If not they can probably find another one easily enough.

I’m no expert but I’d say a business with 100 staff, a multi million pound turnover and no doubt some valuable assets would be on the radar of bigger companies looking at takeovers. It’s something for your friend to be aware of if they do need to find another job and don’t want the same thing happening again.

 

[John Hemming]

If that is the case, but the description was 'sold their business'. That would be TUPE

If someone sold the shares in a business that would also be described as 'sold their business'. It is not that likely that a business of that size would have been other than a limited company. If it were to be a limited company then it is very unlikely that the business assets would have been sold rather than the limited company itself.

 

[Mr D]

If someone sold the shares in a business that would also be described as 'sold their business'. It is not that likely that a business of that size would have been other than a limited company. If it were to be a limited company then it is very unlikely that the business assets would have been sold rather than the limited company itself.

We cannot know unless the OP understands what happened and tells us.

 

[chickenlady]

My apologies - I didn't get reminders of postings.
The original business was an LLP and yes of course the owners flogged themselves half to death building up their business - given the hours my relative works, that is standard in the line of work. Whilst it remained a small business, there was a chance that relative could become a partner in time but not now. There are many similar small businesses around the country which have been taken over by the corporate and all of those in the local geographical area - presumably there is economy in scale - the corporate is young (10 years or so) and aggressive in its take overs.
That's all we know at present - nothing further has been said, nothing has been received in writing. If I find out anything else, I'll let you know.

 

[Newchodge]

My apologies - I didn't get reminders of postings.
The original business was an LLP and yes of course the owners flogged themselves half to death building up their business - given the hours my relative works, that is standard in the line of work. Whilst it remained a small business, there was a chance that relative could become a partner in time but not now. There are many similar small businesses around the country which have been taken over by the corporate and all of those in the local geographical area - presumably there is economy in scale - the corporate is young (10 years or so) and aggressive in its take overs.
That's all we know at present - nothing further has been said, nothing has been received in writing. If I find out anything else, I'll let you know.

Do you know if the acquisition was made simply by the sale of shares?

 

[Mr D]

My apologies - I didn't get reminders of postings.
The original business was an LLP and yes of course the owners flogged themselves half to death building up their business - given the hours my relative works, that is standard in the line of work. Whilst it remained a small business, there was a chance that relative could become a partner in time but not now. There are many similar small businesses around the country which have been taken over by the corporate and all of those in the local geographical area - presumably there is economy in scale - the corporate is young (10 years or so) and aggressive in its take overs.
That's all we know at present - nothing further has been said, nothing has been received in writing. If I find out anything else, I'll let you know.

Perhaps she should set up her own business and refuse to ever sell it.

 

[chickenlady]

I don't, I'm sorry. The original partners are still working in the business. Unfortunately the business is a profession and the fact that it is a business is co-incidental (I know that's anathema to business people, but think lawyers, pharmacists, dentists) so getting reliable information from relative is tricky.

 

[chickenlady]

Perhaps she should set up her own business and refuse to ever sell it

Perhaps he should Mr D. Although selling at retirement might not be a bad idea.

 

[fisicx]

It's all a bit academic now. The shares have been transferred to the new directors, everyone still has a job. The only difference is they are now part of a bigger corporation.

If she doesn't like it she has two options: leave and get another job locally. Leave and move to a new location and get a job in an independent. Until they get taken over.

 

[Clinton]

Do you know if the acquisition was made simply by the sale of shares?

LLPs don't have shares.

 

[Mr D]

Perhaps she should set up her own business and refuse to ever sell it

Perhaps he should Mr D. Although selling at retirement might not be a bad idea.

Then won't have a problem with business owned by corporate so much.

 

[Financial-Modeller]

So OP's relative took a job with an employer hoping to promoted to Partner.

The ownership of the employer has changed and now the OP's relative now thinks promotion is less likely.

Rather than attempt to add value to the new owners, and/or progress on merit, OP's relative tries to find a technical breach in a transaction to which they were not a party, to claim compensation, to which they are not entitled.