Buying a B&B/Hotel/Guesthouse?

Chris Hayton

Buying a B&B/Hotel/Guesthouse? Does it have any staff? If it does you need be aware then of the New Business Transfer Rules

 

For those of you that bought a ‘business’ in the last 25 years or so you may well have come across the TUPE regulations. TUPE is an acronym for:
Transfer of Undertakings (Protection of Employment) Regulations

 

This piece of legislation was crafted by Government to protect employee’s rights in the event of the business where they work being sold. In the very broadest terms it says that the new owner is responsible for the existing employees when the contract of sale is completed.

 

It is certainly one of the matters your solicitor should discuss with you and more importantly the vendor’s legal team prior to agreeing the sale/purchase contract.  It was enacted in 1981 and I was probably one of the first employers to fall foul of the new legislation.

 

I sold my first business around the time the new rules arrived on the statute books. In truth the negotiations for the sale commenced prior to the new rules becoming the law, however matters became protracted and the new rules slid quietly in unnoticed!

 

When I was asked by one of my employees ‘what happens to me when you sell’ I answered truthfully that the new owner wanted to retain all the staff we employed so her position was safe.  That did not seem to satisfy the lady and I duly received a letter from her solicitor asking me about his client’s rights under the TUPE rules and how was I going to satisfy them?

 

At this point I asked my solicitor for his advice and he promptly held his hand up and said that it was their fault the new legislation was not taken into account when the contract was drawn up and as a consequence they would resolve the matter. They paid the lady her dues and did not add it to my bill.

 

The TUPE Regulations have received continual updates since their inception and you can read up on the whole issue by clicking the link above. The most recent update can be found here and it explains the amendments enacted April 2006.

 

For those of you that just need to read a broad summary of the most recent amendments I have listed them below BUT please make sure you and your legal team examine this matter thoroughly before buying or indeed selling your business.

 

 

Main Changes in the 2006 TUPE Regulations

The 2006 Regulations introduce :

 

-         a widening of the scope of the Regulations to cover cases where services are outsourced, insourced or assigned by a client to a new contractor (described as “service provision changes”)

-         a new duty on the old transferor employer to supply information about the transferring employees to the new transferee employer (by providing what is described as “employee liability information”)

-         special provisions making it easier for insolvent businesses to be transferred to new employers

-         provisions which clarify the ability of employers and employees to agree to vary contracts of employment in circumstances where a relevant transfer occurs

-         provisions which clarify the circumstances under which it is unfair for employers to dismiss employees for reasons connected with a relevant transfer

 

The rights and obligations in the 1981 Regulations remain in place, though the 2006 Regulations contain revised wording at some points to make their meaning clearer, as well as reflecting developments in case law since 1981