If you’re purchasing or selling a dental practice, you’ll almost certainly be subject to legal requirements under the Transfer of Undertakings (Protection of Employment) Regulations 2006, also known as TUPE unless you are buying or selling the shares of a limited company.
What is TUPE?
Transfer of Undertakings and Protection of Employment (TUPE) is fundamentally a law that protects employees. The objective of TUPE is to safeguard employees when the ownership of the company they work for changes hands. By law, it moves employees and any obligations associated with them from the previous employer to the new employer.
TUPE applies in the context of a dental practice transaction when an undertaking is transferred, such as when a practice is sold. This implies that when a buyer buys a dental practice, the employees are immediately inherited under their current conditions of employment.
A seller has a responsibility to notify and consult with employees while a transfer is taking place. They should, however, seek guidance from a specialist dental lawyer on the best time to do so.
A buyer, on the other hand, must review the employees’ contract conditions. Suppose the buyer has an issue with the existing contracts. In that case, they should be informed of the TUPE rules and the potential implications of changing employment conditions, as well as any dismissals. To do so otherwise could land them in hot water.
Do Employees Transfer to the Buyer?
When a dental practice’s assets are sold, TUPE allows employees and most workers to be immediately transferred from the seller to the buyer on their current terms and conditions. TUPE does not apply to self-employed workers who offer services to the dental practice.
If you want to retain self-employed associates as a buyer, you should start talking about it early in the process to agree on the conditions on which they will be hired and to make sure that proper safeguards are in place. If they are not retained, the seller must terminate the agreement with sufficient contractual notice.
Protecting the Dental Practice
Many things can happen in the middle of the selling process. For example, an associate may claim that they generated some of the practice’s goodwill and say that they are entitled to a percentage of it. They may also quit and establish a competing business with knowledge of and contact with the seller’s patients. As a seller, you should check ensure the existing associate agreements have effective binding out clauses and act accordingly.
To enforce binding out clauses in an agreement, they must be carefully drafted. The buyer will not be able to enforce the arrangement between the seller and associate since they are not a party to the transaction. If associates are retained after the sale, the buyer must ensure that these safeguards are incorporated in their contract. It is the buyer’s responsibility to ensure that the proper restrictions are in place to maintain the goodwill they just paid for.
It is so important both as a buyer or seller to understand your obligations under the TUPE regulations. Failure to do so could end in a costly legal dispute.
If you are the seller, you must inform your workers about the ownership transfer and inform your buyer about the agreed-upon conditions for each team member. If the buyer intends to make any changes that may affect the staff, it is still the seller’s responsibility to inform any affected employees. You can get expert assistance from specialist solicitors to ensure that you are fulfilling all obligations and following all guidelines.
It is advisable to consult experts to ensure that buyers and sellers do not fall foul of TUPE regulations. Should you require any further information or assistance, Goodman Grant Solicitors is the leading UK law firm providing specialist legal services to the dental profession. Get in touch with our experts today!