Selling business, do I have to make staff redundant?

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rob roberts

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Jan 19, 2008
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I have a potential buyer very interested in my shop, however initial discussions indicate they may well not want to take the two part time staff I have, possibly just one as they have family members who could help run it. I have owned the shop for 9 years, I took over the contracts of two employees when i bought it. One has since retired, so I have another lady employee who has been there 7 years, she works part time 19 hours a week.The original employee who has been with me since I bought it is 70 years old. She works part time 16 hours a week,
What is my position if the purchaser doesn't wish to take one or both of them with the business?
Do I have to make them redundant or is there a different solution?
Any advice would be greatly appreciated.
 

Newchodge

Business Member
Nov 8, 2012
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Newcastle
The new owners do not have the choice about whether they take them on. they are covered under TUPE and will transfer with the business. The new owner can then decide if they want to make them redundant, and face the risks that it may be unfair dismissal.

Whatever you do, DO NOT make them redundant, or talk to the new owners as if there were any option ither than them being transferred.
 
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Clinton

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Jan 17, 2010
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There are many ways around TUPE. Are you selling the assets or the shares of the business? If you're selling the shares then it's up to the new owner to deal with the staff how he sees fit.

But the best option for you is to provide the employees with some inducement to opt out of TUPE (You'll get people saying employees can't opt out of TUPE, but that is incorrect. There are ways, sort of.)
 
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The Byre

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Aug 13, 2013
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As George Carlin said, "Golf is a sexist, elitist, racist game. And it's f**king boring! You hit a ball, you walk behind it and you hit it again! What kind of an idiot sport is that?"

As for holding up traffic - you'll find me doing wheelies around the recycling bins at Lidl's (and putting brown glass into the white glass container, just to stick-it to The Man!)
 
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As George Carlin said, "Golf is a sexist, elitist, racist game. And it's f**king boring! You hit a ball, you walk behind it and you hit it again! What kind of an idiot sport is that?"

As for holding up traffic - you'll find me doing wheelies around the recycling bins at Lidl's (and putting brown glass into the white glass container, just to stick-it to The Man!)

Haha

Coffee is now somewhere between my throat and nose!
 
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Newchodge

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Nov 8, 2012
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Newcastle
There are many ways around TUPE. Are you selling the assets or the shares of the business? If you're selling the shares then it's up to the new owner to deal with the staff how he sees fit.

But the best option for you is to provide the employees with some inducement to opt out of TUPE (You'll get people saying employees can't opt out of TUPE, but that is incorrect. There are ways, sort of.)
You're right. There are many ways, all of which are illegal and leave the OP open to a claim. Employees may accept an inducement and then go on to make a valid claim.
 
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Clinton

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Jan 17, 2010
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There are many ways, all of which are illegal and leave the OP open to a claim
I did predict we'd get that response ;)

If the OP wants contact details for a legal firm who can advise him on the ways around TUPE (including, but not limited to employee inducements), he can drop me a note.

While I fully support the intentions behind TUPE, it became a nuisance ...and largely because there was so much uncertainty around it for so long. It's caused no end of problems in the buying and selling of businesses.
 
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Newchodge

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Nov 8, 2012
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I did predict we'd get that response ;)

If the OP wants contact details for a legal firm who can advise him on the ways around TUPE (including, but not limited to employee inducements), he can drop me a note.

While I fully support the intentions behind TUPE, it became a nuisance ...and largely because there was so much uncertainty around it for so long. It's caused no end of problems in the buying and selling of businesses.
You can't sell shares in a business unless it is a limited company. This, clearly, is not.

Offering an inducement for an employee to sign away their legal rights is absolutely legal, however the agreement is not legally enforceable without a compromise agreement, which must include an incentive for the employee and advice from an independent legal advisor with public liability insurance.

Why would this OP go to those lengths when he can simply require the purchasers adhere to the law?
 
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Clinton

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Jan 17, 2010
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You can't sell shares in a business unless it is a limited company. This, clearly, is not.
Clearly? I missed the bit where the OP said it was not a limited business (unless you're assuming that because it's a shop it cannot be a limited company). In any case, given that the OP replied to indicate he's selling assets, the issue of shares doesn't arise.

Why would this OP go to those lengths when he can simply require the purchasers adhere to the law?
I believe you're confused on this as well. I didn't suggest anyone break the law ... unless you mean that finding a legal way to dismiss employees is somehow not "adher(ing) to the law".

@The Byre, while what you say is true of many business, it's not universal. In some businesses it's the IP that has the highest value and in others it's the commercial real estate. Where there's oversized value in assets such as these it's often TUPE that gets in the way of those assets being employed to maximum commercial (and exchequer) benefit. Unfortunately, there's a lot of misinformation around, from trade unions and others.

Where employees are the main asset they need to be cherished and protected. Of course.
 
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It could well be that the existing staff don't want a new owner who'll come in with modern new fangled ways, changing things all over the place. Because he will!

You can't make them redundant, but you can talk to them, and probably will find that they'd be very pleased to alter the terms of their employment given a few alternative scenarios.
 
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The Byre

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Aug 13, 2013
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In some businesses it's the IP that has the highest value and in others it's the commercial real estate.

I profoundly disagree (we are getting philosophical here!) Those are assets and not a business. A business may have assets and the business may enjoy a higher value as a result of those assets, but those assets are not the business. The employees creating and using and/or exploiting those assets are the real business.

Let us take your two examples, IP and real estate -

Real estate - A man buys a house and rents it out. He uses the rent to buy a second house - and so on, until he has a property portfolio of ten houses. As a result, he owns the bank £2m and has TO (rent) of £60,000. Ten years on, because he is a clever lad and knows how to buy low, his properties are worth £4m. He still owes £2m and he is able to sell his whole property company for that £4m.

The real company is not those houses, but what our lad has between his ears. He knew where, when and what to buy. He now has £2m trouser money (less any taxes of course) and can go out and buy more houses, or go and do something else.

If I REALLY wanted to buy his company, I would need to buy into his knowhow as well. If he had a team that managed a few hundred houses, instead of just ten, if I just bought those houses, I still would not have a business. If I get the whole team, then I have bought the business.

Intellectual property The ultimate IP is a movie. It can be worth a billion dollars, but still it has no physical form. It may have cost $100m or more to make, but it is still just data on a USB drive or on a server. It takes a few hundred people about a year to make such a movie and the whole thing is a huge operation, involving all kinds of specialists and the end result is something you could stick onto a computer disk. It is data and a wad-load of contracts. Pure IP.

Once you have made your movie, you sell it to a distributor (via a so-called sale-and-lease-back deal) and pay-off all those people that helped you make the movie. (It's not really that simple, as there are residuals, cuts known as points on gross or net, investors and all kinds of rights holders, etc., etc., etc. - But you get the idea!)

Has the distributor bought himself a business? No, of course not! He bought an asset, which he will sell across Planet Earth and then sell on in multi-billion packages with other movies, to DVD and Blu-Ray distributors and TV media buyers.

So where's the company?

The company is the production team that put the whole thing together. It is the lawyers that drafted the agreements, the script writers and their editors that knocked an idea into three acts and 36 scenes, the director, the CGI artists, the carpenters, scene painters, gaffers, camera people, focus pullers, cinematographer, composer, arranger, musicians, editor and all his/her assistants, Foley artists, sound editors, lighting guys, riggers, drivers, caterers, sound designers, actors, stand-ins, extras, the list is truly massive and runs to hundreds of specialists that an outsider has usually never even heard of.

Above all, the business is the producer, the guy who tells a young punk-scriptwriter with a dream, "Listen kid! I want more of the same, but different!"

These people can re-form and go on to make another movie. They and not the movie, are the business.
 
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