Legality Of Manager Buying Employer's Business Premises

trajan said:
But given your dismissal of any conflict here between someone acting solely in his employer's interest vs someone acting largely in his own interest, i.e. getting control of the business, then you hardly know much on employment law.
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How on earth do you think that buying a premises would give the purchaser effective control over a business operating there?
 
trajan said:
This acquisition of an employer's premises immediately seemed to me to be a breach of the factory manager's implied terms of his service contract.
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There is no conflict. He bought a building. That's all.
On the broader point of an implied conflict of fidelity by the employee; he's an employee not a medieval knight. Most businesses are set up by people who leave their jobs and set up in competition with their former employer. That's how the market improves. That's competition. It would be morally and ethically wrong to stop that from happening.
 

These laws are relatively recent. And employee fidelity is a term that has been interpreted in the contemporary world whenever such cases are brought, as far as I have seen them. Employee fidelity is not like criminal conversation, conjugal rights or suchlike.

The manager who buys the premises seems to me to have become a de facto partner in the business. In theory his employer may move the business to a new premises. But in practice this would be very disruptive to the customer base, would involve a new long-term lease and would probably be more expensive rent-wise. Dismissing the manager would also bring about serious disruption to the business - and would also require a premises move since the disgruntled ex-manager would be sure to make life as awkward as possible for his replacement.

I would expect that the eventual solution to this situation would be an agreement between the business owner and manager along the following lines:

1. The manager contributes the acquired premises to the business in exchange for the equivalent of £50,000 worth of shares in the business to be transferred to the name of the manager.
2. The manager becomes a director of the restructured business.
3. An agreement is made between the owner and manager of the business on a set of commercial and/or investment decisions, most of which the manager has proposed to the owner without success in foregoing years, which will be implemented over the following 5 years.
4. The manager's salary, bonus and eligibility to dividends are reviewed in line with his increased responsibilities.

I don't know the detail of what happened except that the manager eventually became the owner of that business.

As to what you are saying on many businesses being set up by ex-employees of a competitor, this is fine if:

1. No restraints of trade are written into the ex-employee contract. If there are, the ex-employee has to either work down the time lapse in another job (often nominal as most of his time will be taken up with preparing for launching his own business) or else seek an injunction in the court to reduce or remove the restraint if it is too onerous.

2. Nothing in the new business involves exploitation of information or technical advances gained during working for his ex-employer.

I know there are still people who work in say an auctioneering business and, when they are leaving that employ to set up on their own, see nothing wrong with telling certain clients of their soon-to-be ex-employer that they are leaving soon you know and would be happy to discuss the matter at hand at their new office on Main Street by the Holly Cafe . . .

Then there are some retiring doctors, dentists, solicitors and accountants who "sell" their ex-clientele. I have seen ads in the Irish Times by a firm of solicitors offering to "buy" a "block" of clients from an accountant . . . So much for data confidentiality.
 
Where exactly is the breach of data confidentiality when this happens? Or where a professional practitioner dies or has to retire suddenly?
 
Does the term "Making a mountain out of a molehill" have any relevance here!!!

The manager purchased the bosses building, probably using some of the money that the boss paid him
Can't see any thing wrong with that, in fact I was thinking of doing the same myself a few years ago!!
 
@T McGibney

I think client Z is entitled to know and approve to whom their personal, health, financial or legal affairs are being dealt with.

Think of what would happen in a small Irish town if a solicitor or accountant bought a client file showing details of debts owing by a person they hate.

But look, we're off track here.

Let's leave it.
 
trajan said:
@T McGibney

I think client Z is entitled to know and approve to whom their personal, health, financial or legal affairs are being dealt with.
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So a client of a professional firm "is entitled to" exercise a veto on their hiring decisions?
trajan said:
Think of what would happen in a small Irish town if a solicitor or accountant bought a client file showing details of debts owing by a person they hate.
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What do you think would happen?
 
trajan said:
I read in a prominent businessman's autobio
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Autobiographies are not factual, a pinch of salt might not be enough to cover this one.

trajan said:
So he offers to sell X the premises of both his own factory plus the neighboring factory (whose owner has refused the offer of premises purchase
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trajan said:
because they withheld important commercial or technical opportunities from their employer - opportunities identified while working for that employer and with the benefit of privileged information or support from their employer's organization
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Where was anything withheld? Both owners were given first refusal and both refused the property purchase. There was nothing secretive or underhanded about it. And even at that, how was this a coup for X? The manager in a different company has just bought his premises so he now has a new landlord

You are making some massive leaps and assumptions with that. Very few rented premises would have a meaningful impact on a companies performance

trajan said:
I don't know the detail of what happened except that the manager eventually became the owner of that business.
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So manager buys a property and the business owner also eventually wants to retire so sells the business and the manager also buys it...sounds like a normal transaction. You are implying something underhanded but have provided absolutely no context or evidence of anything of the sort.
 
trajan said:
I think client Z is entitled to know and approve to whom their personal, health, financial or legal affairs are being dealt with.
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trajan said:
Think of what would happen in a small Irish town if a solicitor or accountant bought a client file showing details of debts owing by a person they hate.
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That's actually an interesting ethical question.
I presume that the client would leave the practice and take the accountant to court if their personal financial details became public.
T McGibney said:
So a client of a professional firm "is entitled to" exercise a veto on their hiring decisions?
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And that makes a nonsense of any idea that a client should have a say.
 
Purple said:
That's actually an interesting ethical question.
I presume that the client would leave the practice and take the accountant to court if their personal financial details became public.
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They wouldn't even have to take them to court. A data protection breach report and a complaint to their professional regulator would be enough to set the cat among the pigeons.

trajan said:
Think of what would happen in a small Irish town if a solicitor or accountant bought a client file showing details of debts owing by a person they hate.
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It's a pity the poster didn't respond when I queried this most peculiar comment.

No, Killinaskully is not a documentary.
 
To me , a lot would depend on the Managers contract and whether or not he had an obligation to report any conflict of interest to his employer. To me, buying the site, would correspond to such a conflict of interest as suddenly, he could be in a position to take and make decisions that suit him as the landlord and not as the manager for his employer.

If no such clause exits, it comes down to a moral dilema
 
T McGibney said:
They wouldn't even have to take them to court. A data protection breach report and a complaint to their professional regulator would be enough to set the cat among the pigeons.
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Having had considerable experience with one of them I've absolutely no faith in professional regulatory bodies.
Anyway, I think we agree on the substantive point.
 
I don't see any dilemma.

He is not depriving his boss of anything.

The boss could have bought the premises when he was offered it.
The original landlord could have terminated the lease whenever it was up for renewal.

Nothing has changed.

Brendan
 
Purple said:
Having had considerable experience with one of them I've absolutely no faith in professional regulatory bodies.
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My comment stands regardless of their ultimate efficacy.

I have absolutely no doubt that they would destroy any professional member who weaponised confidential personal information in a personal dispute with a client.
 
Peanuts20 said:
To me, buying the site, would correspond to such a conflict of interest as suddenly, he could be in a position to take and make decisions that suit him as the landlord and not as the manager for his employer.
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But the business has a commercial lease in place, what could the new owner do that would so disadvantage his employer so much?

B2B businesses move premises all the time, if this location was so important to this particular business it's unlikely the owner would have passed on the chance to buy it.
 
It all depends on the terms of the lease, for example, does it have a rent break clause in it (which is quite common in my experience)? More importantly, it gives the manager a "hold" over the owner from the point of view of his own performance. You can't sack me, I own your premises

Unlikely scenarios in fairness but it may make the owner uncomfortable. And yes, businesses do move all the time but that is also a cost
 
No it doesn't.

Any attempt to blackmail a commercial tenant would melt like sleet once challenged.
 
ClubMan said:
And a properly negotiated lease contract should preclude the landlord from evicting on the basis of a hissy fit.
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Yeah, if the lease is poorly framed to protect the interests of the tenant business, then they either should have bought it or start planning to move.
 
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