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HCR Law Events

12 July 2022

Selling your vet practice – what happens to your staff?

For practice owners preparing for sale, ensuring your employees are adequately protected and treated appropriately during the process is a key consideration.

Your staff may have been with the practice for many years and demonstrated commitment and loyalty to the practice management, their colleagues and the animals in your care along with their owners. You will want to ensure they are appropriately protected against unexpected changes by a buyer – deliberate or inadvertent.

Employees are essential to the smooth running of a practice, and its continued success and ‘saleability’ will be impacted by their ongoing hard-work and attitude towards the sale process and your buyer. Potential buyers will give careful consideration to your staff resources in terms of their commitment and the arrangements for their work.

The structure of your sale sets the path of your obligations towards your employees: a share sale or an asset sale. For asset sales, there are requirements under TUPE regulations to comply with.

Regardless of transaction structure, one of the central requirements is to ensure your contractual documents reflect current terms and conditions of employment. This may be in an employment contract, side letters, a handbook or general policies.

Having these documents to hand and up to date is essential evidence to the buyer of employee entitlements. Providing correct contractual information and details of working arrangements and non-contractual nuances is both of central importance and a legal requirement. These are either via disclosure or in compliance with TUPE obligations to provide ‘Employee Liability Information’.

Where written contracts are outdated, or missing key information, failing to provide updated details creates a risk that a buyer may inadvertently change pay or benefits – including those implied by custom and practice – owing to a lack of knowledge. This could both upset the employees and present the risk of post-sale litigation, whereby the buyer claims they were not presented with accurate information as part of the sale process.

Where the assets of the practice are being sold, the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) apply, providing for the automatic transfer of employees and the preservation of their terms and conditions, and length of service.

Only in very limited circumstances is a buyer permitted to change terms and conditions of employment – where there is an economic, technical or organisational reason (‘ETO’) and must provide information of the envisaged changes in advance of the transaction completing.

There are detailed obligations on both sellers and buyers set out in TUPE legislation, with significant penalties for non-compliance. Where redundancies are proposed, careful consideration of both the information to be given to employees and the timing of consultations is required.

Where shares are being sold, there are no legal requirements to notify the employees. Buyers looking to instigate post-completion changes will still be required to adhere to the ordinary principles of employment law in terms of consulting staff (or their representatives where staffing numbers dictate) and seeking agreement, or face claims for constructive dismissal and/or breach of contract.

Whilst the parties to a sale can be naturally apprehensive about releasing information to employees at an early stage in the transaction, good employee relations and communication at the right time will assist with gaining employee support for the transaction and minimise avoidable anxieties.

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About the Authors
Rebecca Leask, Head of Health & Social Care Sector and Birmingham office and Notary Public

Rebecca Leask is a Birmingham solicitor, specialising in corporate.

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