Selling a business is a complex process that requires careful and diplomatic management on the part of company owners.
Among the many serious decisions you will need to make both before and during the process, you will need to decide how you choose to support your employees. There are legal obligations you will have to abide by, but you will also have to think about the more nuanced issues that come with selling, such as how you will manage any workplace disputes or any other HR-related challenges that may crop up during the sale.
This essential guide aims to provide you with the answers and advice you need to ensure that your employees are effectively supported throughout the sale of your business.
Abiding by TUPE regulations
The legal framework surrounding employee rights during a business sale is known as TUPE, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (augmented by the Regulations of 2014).
While these rules are understandably complicated, in a nutshell, TUPE aims to ensure that employees are taken care of during the sale of a company. This means that when a new employer takes over from the old one, the business’s workforce will still be subject to the same terms and conditions of employment and their rights will not be affected by the sale.
Accordingly, if a new employer is considering dismissing or making staff redundant after the sale for no other reason than that the transfer is taking place, then these regulations would deem those dismissals or redundancies as unfair and the new employer could face legal consequences. Dismissals or redundancies connected to the sale would only be considered lawful if they were for specific and valid reasons, such as a lack of available work following the change of ownership.
In short, employees can legally be dismissed for causes unconnected to the sale, but – in general – not as a direct result of the sale, as this could infringe their employee rights.
Notice periods
One of your obligations to your employees is to provide them with ample notice of the sale. This includes providing them with all the essential details, such as who the new owner will be, how the sale will affect employees, and how soon it will take place.
There is no specific time frame you need to adhere to when it comes to giving notice, but it’s vital to inform your workforce as early as possible to give them plenty of time to prepare and adjust. This is because adequate time must be provided for you to have consultations with your staff about the details of the sale. Consequently, the more staff you have, the longer the notice period should be, as you will need more time to arrange those consultations.
Failure to provide your team with adequate notice could result in significant financial penalties, amounting to 3 months’ pay per person.
If your employees are unionised, you will need to inform the union of the approaching sale. On the other hand, if your workforce is non-unionised, they need to be given adequate time to elect representatives, whom you will then provide with all the pertinent details of the sale. This information should be given in written form.
Employees who refuse to transfer
It’s important to recognise that employees have the freedom to refuse to make the transfer to new ownership. However, by doing so, this could result in the invalidation of their contract and they might not even be entitled to receive redundancy pay if there is no valid reason provided for their refusal.
Unsurprisingly, the whole experience can be a difficult time for employees, so it’s important to treat them with tact, diplomacy, and kindness. Providing them with all of the vital information about the sale can help them to feel more positive about the prospect, and, hopefully, the new employer will also dedicate plenty of time and energy to ensuring that the process is a very positive one for all involved.
How to support your workforce
It will be up to you to decide precisely how you provide support to your staff. For example, you may want to provide one-to-one sessions where you can offer reassurance in person. You may also wish to invest in specialist advisory or counselling sessions to maintain the mental and emotional well-being of your team.
Significant changes of any kind – particularly those that are beyond someone’s control or influence – can have a severe impact on employee mental health. As a result, it’s important to provide your staff with appropriate levels of support to help ensure that none of them suffer adverse health effects from your decision to sell.
Why use a business broker to sell your business
Because selling a business is such a complex process, with so many metaphorical balls to juggle (not least, providing adequate support to employees), then you may wish to hire a business broker to guide you through the entire process.
The role of a business broker is to serve as an intermediary between you and your buyer. However, they can also provide you with plenty of invaluable advice on all aspects of selling, including how to manage your employees and help them through the transfer of ownership.
Having an expert at your side through every stage of the selling process can remove a huge weight from your shoulders and leave you free to focus on running your business and orchestrating a seamless exit.
How we can help
Here at Harris Acquire, we understand how intimidating it can be for owners to face the prospect of selling their business. With so many legal and financial hoops to jump through, let alone your dedicated employees to support, this process leaves you with a lot on your plate, to say the least.
That’s where our friendly and experienced team comes in. We are more than happy to take over the entire M&A process from start to finish, taking the stress off your shoulders and leaving you free to focus on the day-to-day running of your business.
That’s right, we will oversee every single step of selling your business, from scouting and verifying prospective buyers to professionally marketing your business and helping with negotiations and due diligence.
