Maybe you are thinking of selling the company or simply shutting up shop and retiring, but in either case, if you employ people there are some costs you need to factor into your plan.
Closing your business
If you want to close the business, any employee who has worked for you for more than two years would be entitled to statutory redundancy pay. This is based on their wage and length of service.
This, of course, can be a significant cost and might well have a bearing on whether you decide to close or sell the business (if you believe it has a market value).
Other than not replacing staff when they leave there is little you can do to avoid these liabilities.
If you are worried your business cannot meet the redundancy payments required, you could potentially argue the business is insolvent. Our insolvency team can advise you.
Selling your business
If you employ people and wish to sell your business you will need to follow the TUPE regulations. These apply to all businesses operating in the UK, regardless of size or activity.
TUPE basically safeguards the rights of transferring employees and requires you to disclose fully to the purchaser whom they will be employing and what their liabilities will be.
It is a complex and potentially quite costly process with harsh penalties for getting it wrong. You should absolutely take advice and factor the likely costs into your plans, including asking price.
What to do now
You cannot avoid these costs but you can mitigate them if you plan ahead and run your business accordingly.
Every situation is different and generally involves thinking beyond simply the employment issues involved. As part of a broad-based commercial law firm we can certainly give you the advice you need.
If you would like to discuss TUPE or any aspect of buying, selling and running your business, please get in touch.
- Sale and purchase of business, asset and shares
- Business start-ups and SME’s
- Management Buy-Outs (MBO’s) and Buy-Ins (MBI)
- Share buy backs
- Due diligence
- Company re-organisation and re-structuring advice
- Shareholders’ and partnership agreements
- LLP and Partnership advice
- Shareholder disputes
- Drafting inter-creditor, facility, guarantee and other security agreements
- Subordination and priority arrangements
- Advice on personal and corporate guarantees
- Joint ventures and collaboration agreements
- Terms and conditions of sale or purchase for goods/services
- Agency and distribution agreements
- Non-disclosure agreements (NDA)
- Bespoke trading agreements
- Intellectual property protection
- Incorporation of limited liability partnerships and companies
- Creating and/or maintaining statutory registers, minute books and share certificates
- Preparing board minutes, resolutions and notices
- Assisting with your annual return
- Drafting or amending Articles of Association
- Dissolving or striking companies off the register
- Implementing changes to your share capital
- Drafting and filing of Companies House forms.
Dealing with creditors’ demands for personal guarantee payments
The company had substantial liabilities to the bank and its landlord. These liabilities were personally guaranteed, jointly and severally, by both directors.
The bank and landlord both called in the personal guarantees by pursuing our client, rather than the co-director who had little cash or assets.
As a result our client was required to pay the guarantees totalling tens of thousands of pounds.
Claiming a share of the guarantee payments from the co-director
We were instructed to pursue a claim against the co-director for a contribution of half the amount our client had paid.
The co-director instructed solicitors to resist the claim, alleging they had little or no involvement or control in the business and so should not have to contribute.
We built a case based on the detailed consideration of historic company records which demonstrated the extent of each directors’ involvement in the company. We supplied extensive witness statements and secured the disclosure of financial and other company records relevant to the case.
A number of witnesses also gave evidence at trial.
Winning and enforcing the claim
We secured a judgment at trial against their former co-director for half of the sum our client paid under the personal guarantees, together with interest and their legal costs.
Subsequently we took enforcement action to recover payment and, despite the co-director’s limited means, successfully recovered the full sum for our client.
Former Director and Shareholder of Limited Company
The background to the situation was complicated, yet Verisona Law quickly grasped the essentials and prepared clear arguments with a minimum of wasted time and cost.
Throughout a worrying period, their calm approach allowed me to fulfil my group function with a restored confidence, having been distracted prior to Verisona Law’s appointment by the aggressive and unjustified stance of the Secretary of State.
I have no hesitation in recommending Verisona Law to anyone in a similar position.
Individual - Chairman of a group of companies in the construction industry
"Over the years, I have developed a great trust in my working relationship with Mike Dyer, Head of Commercial Law at Verisona. One of the things I value most is that he is always at the end of a phone. On the rare occasions he is unavailable, his secretary is always well informed and very helpful. Through Mike, I have met many other members of Verisona and, just like in the recruitment industry, they understand the importance of being treated like an individual. They make me feel valued and important to both them and their business. At Verisona, you always deal with real people who you know and are in a position to help. Most importantly, Verisona delivers. We recently had an urgent situation regarding the restrictive covenants of new members of staff. Employment specialist Susan Ball came in on a day off to listen to us, dissect and analyse the situation, and translate what we wanted to achieve into the best possible legal language and solution. This is just one example of the calm, efficient professionalism I have come to value from Verisona over the years. Verisona has a refreshing approach to the law. They are there when we need them, always easy to talk to, go out of their way to make sure that we understand what they are doing for us and why, and always get the best results".
Legally enforcing the tribunal award
To enforce the Tribunal award we applied to the Defendant’s local County Court for it to be registered and for permission to enforce the award.
The Court granted the application and on the Register of Judgments, Orders and Fines. As a result the Tribunal award would appear as a County Court Judgment which would likely affect the Defendant’s credit rating.
Time limits for enforcing Tribunal awards
It is worth noting that there is no time restriction for registering or enforcing a Tribunal award. You can enforce one even if it is several years old. In addition, it is usually possible to claim interest on the amount until you receive payment.
A commercial business