Taking on a new business and staff?

paulsm

I am looking at buying a local shop with 4 part time staff , I am not sure it warrents 4 people so what are my obligations to present staff? Can I replace them? or Lay them off?

Astaroth

Your solicitor will be the best person to give you advice which I assume you are involving if you are seriously considering buying a company.

I assume the original business is a limited company in which case just because the existing company has changed ownership doesnt change the employee's rights. How easy it is to get rid of employees will depend on their contract and their length of service. You should be able to get most of these details during the due diligence

Pennywise

At the very least you need full details of the employees (length of service, pay, accrued holiday entitlements, etc)., so you (or your solicitor/accountant) can calculate what liabilities you would be taking on if you took on the existing staff.

As a buyer, you DON'T have to take on the staff - if you don't want them, it is up to the seller to make them redundant and pay all dues - this needs to be part of the price negotiation process. You could then take on who you wanted and the clock starts anew with you as an employer.

If you do keep the staff on (i.e. the existing owner doesn't make them redundant), then YOU take on the responsibilities and all accrued benefits, so if you later decided to make some or all of them redundant, YOU are liable for their redundancy pay, calculated over their full period of employment (regardless of who owned the business). It is therefore sensible to negotiate a reduction in the business price to take account of your liabilities.

Whether you are buying a limited company or just a business, this is the same as the "TUPE" (?) rules are in force - meaning that employees kept on retain all their rights as if there has been no break in employment, even if their employers are different.