# Company takeover with no employment contracts



## what_to_do (15 May 2015)

Hi,

Rumour has it my employer is retiring and selling the company as a going concern.

I've been reading a lot about TUPE and the like and it all sounds pretty ok.

My one issue is we don't have employment contracts.  (nobody does in the company 20+ people, we're all pretty well paid, good benefits etc, it's not like we're being exploited or sub minimum or anything, just no contracts)

How will that work with a takeover?  As I understand it we will transfer to the new company and need to sign new contracts.  But what if there's Ts and Cs we don't like?

Ordinarily refusing to sign the new contract seems to be equivalent to resigning, but if we have no contracts what happens?


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## thedaddyman (15 May 2015)

Firstly TUPE only applies to permanent staff

If you don't have a contract, your current employer is acting illegally. I would suggest that something is put in place in advance of any sale. It might make the business more attractive to any potential bidder as they will have less HR issues to resolve

For now, you should start documenting your current T&C's and start gathering any documentation you have on things like start dates (p60's for example). However there needs to be a serious discussion with the current owner.

Note pensions are not covered under TUPE


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## Purple (18 May 2015)

thedaddyman said:


> Firstly TUPE only applies to permanent staff
> 
> If you don't have a contract, your current employer is acting illegally. I would suggest that something is put in place in advance of any sale. It might make the business more attractive to any potential bidder as they will have less HR issues to resolve
> 
> ...


Good suggestion; get contracts in place prior to the sale.


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## Jim Stafford (18 May 2015)

In practice, the biggest stumbling block to a purchaser acquiring a going concern business is TUPE, because of the extensive protection that it gives existing employees.

In "grooming" a business for sale, the company's professional advisors should have, in my view, advised the company to formally document what are the terms and conditions of employment etc, so that any prospective purchaser will know exactly what employment contracts they are acquiring.

If you do not have written terms and conditions and the business is sold, then the purchaser of the business will have to "inherit" your existing terms and conditions, whatever they are.  If the terms and conditions are not set out in writing with your existing employer, then there could be disputes with the new employer! That is why purchasers of businesses spend some considerable time and effort on due diligence of employment contracts.

If your boss does sell, he is obliged to give you 28 days notice of the sale.

Jim Stafford


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## what_to_do (9 Sep 2015)

Hi, I'm back.

Thanks for the info.  it appears that due dilligence has been done and the sale is going ahead.


What all this means for us staff I dont know.  They seem to be ignoring the 28 days notice obligation too, the boss doesnt seem to care too much for being told how to run his business.......

Is there anything the staff can do to force the current owner to document our terms and conditions prior to the sale? (short of industrial action, which will never happen)


Cheers


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## Jon Snow (9 Sep 2015)

There seems to be a lot of assuming going on here...

My assumption would be that very few businesses with 20+ employees aren't operated by a company.

I would suspect the ownership of the company, which is the actual employer, is what is changing hands. If that is the case then nothing is changing from an employment perspective.

OP, can you please clarify?


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## what_to_do (10 Sep 2015)

Yes it is a limited company.


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## Deas (10 Sep 2015)

Is there any way you could sight the due diligence - t&c's should be outlined therein.  I would insist upon it if the buyer.


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## T McGibney (10 Sep 2015)

Jon Snow said:


> There seems to be a lot of assuming going on here...
> 
> My assumption would be that very few businesses with 20+ employees aren't operated by a company.
> 
> ...



It is more normal for a business to be sold than the company running it. Simply because when a company changes hands, the new owner automatically acquires all the contingent liabilities attaching to it,  eg risks arising from historic compensation claims or tax irregularities.

But you're right - its difficult to comment definitively here in the absence of full information (which the OP may not even have at this point).


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## what_to_do (10 Sep 2015)

Deas said:


> Is there any way you could sight the due diligence - t&c's should be outlined therein.  I would insist upon it if the buyer.



I cant because we've not been told.  Technically only a few people know, one of those is keeping me in the loop as much as they can, but until an announcement is made there's not a lot I can ask without landing that person in hot water.



T McGibney said:


> It is more normal for a business to be sold than the company running it. Simply because when a company changes hands, the new owner automatically acquires all the contingent liabilities attaching to it,  eg risks arising from historic compensation claims or tax irregularities.
> 
> But you're right - its difficult to comment definitively here in the absence of full information (which the OP may not even have at this point).



No, I dont know much more than I've told ye unfortunately


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## Leo (11 Sep 2015)

what_to_do said:


> I cant because we've not been told.



Deals like this often fall through, the more people that know, the more likely it is someone or something will scupper the deal.


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## what_to_do (14 Sep 2015)

Leo said:


> Deals like this often fall through, the more people that know, the more likely it is someone or something will scupper the deal.



True, but we're within the 28 day notice period required by TUPE and we've still not been told anything.


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## Jon Snow (14 Sep 2015)

what_to_do said:


> True, but we're within the 28 day notice period required by TUPE and we've still not been told anything.



Which implies it's not the business that's being sold, but the company itself - no transfer of undertaking then.


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## Purple (16 Sep 2015)

Nobody is going to buy a company without knowing what the redundancy liability is. 
In the absence of a contract the employees effectively have the maximum protections allowed in law.


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## what_to_do (18 Sep 2015)

Jon Snow said:


> Which implies it's not the business that's being sold, but the company itself - no transfer of undertaking then.



Ah, so if the whole company is being bought out then TUPE doesnt apply?



Purple said:


> Nobody is going to buy a company without knowing what the redundancy liability is.
> In the absence of a contract the employees effectively have the maximum protections allowed in law.



I guess they're factoring that into their price, cos they're aware of it and it's still going ahead.


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## what_to_do (18 Sep 2015)

Just wanted to say again folks that I really appreciate the input


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## what_to_do (7 Dec 2015)

Hi,  

Just said I'd report back.  The takeover went ahead, and the owner sold his 100% shareholding to the new owners so we are all still employed by the same company.  Nothing much has changed so far anyway, they are running us fairly well at arms length.

hopefully I wont be back looking for more advice.

Thanks again


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## Leo (8 Dec 2015)

Thanks for reporting back, hope it works out for you.


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