Small business owners planning to sell their companies face a delicate decision about when and how to inform their staff, particularly those who have worked there since the beginning, according to employment law guidance.
Catrin Mills, an employment partner at law firm Sharpe Pritchard, said that while business owners may feel uncomfortable keeping loyal employees in the dark about something as significant as a potential sale, there is a need to strike the right balance. Telling staff too early, when plans may still change or fall through, could cause unnecessary stress and uncertainty, she said. Business owners must also take account of any confidentiality obligations surrounding the sale.
A key legal consideration is TUPE, or the Transfer of Undertakings (Protection of Employment) Regulations, which may apply depending on how the business is sold. According to the guidance, TUPE is designed to protect employees when the business they work for changes hands. If it applies, their employment will generally transfer automatically to the buyer, preserving their continuity of service and existing employment rights. There are specific obligations on the employers involved to provide affected employees with information about a transfer, and where changes affecting them are proposed, consultation obligations may arise.
When the time is right to inform staff, business owners should speak to them personally but avoid making promises about job security or future arrangements that ultimately depend on the buyer, Mills advised. She recommended that owners consider carefully when they share information and how much they can sensibly say at each stage, and to take legal advice on what they need to do in these circumstances.
For small business owners with long-serving staff, careful timing and legal compliance when announcing a sale can help protect both employees and the sale process itself.