Getting your employment contracts in order before selling your dental practice

28th September 2021

Like any business, one of the key components in the smooth operation of your dental practice is your staff. When preparing for sale, potential buyers will attach fundamental importance to your staff resources, both in terms of numbers and the arrangements for their work.

One of the key ways to demonstrate the effective operation of your employment relationship is through written employment contracts.

All employers are required to set out key information in writing to employees under employment legislation (known as a ‘section 1 statement of terms and conditions’, but the importance of written employment contracts goes far beyond legal compliance.

Buyers will want to understand the employment status of those working at the practice. Commonly, practices engage a mixture of employed and self-employed people. The absence of an employment contract can cast doubt over employment status and lead to protracted questioning around how the relationship operates in practice. For instance;

  • Are the staff PAYE?
  • Do they enjoy employment entitlements?

Clear, accurate, and up to date written particulars will enable a swift assessment.

Upon learning of a practice sale, staff will be anxious to ensure their employment rights and terms and conditions are maintained. 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.

Where their written contracts are outdated, or missing key information, there is a risk that a buyer may inadvertently change pay or benefits – including those implied by custom and practice – owing to a lack of knowledge. That 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.

An early review of employment contracts is an essential part of pre-sale preparation to ensure all entitlements are accurately captured. It also provides time to update or rectify any anomalies before the sale proceeds.

If you have any questions on your employment contacts ahead of your practice sale, please contact Stephenie Malone on 07896 462 779 ([email protected]).