After the 1 May 2014, the employment due diligence enquiries must be provided 28 days before completion (the date of which the buyer legally owns the practice). This only applies to an asset purchase and not where shares are being transferred. Before 1 May 2014, these enquiries had to be made 14 days in advance. The information the seller has to provide to the buyer includes the following:
- Identity of the employees
- Age of the employees
- The employment particulars
- Disciplinary and grievance records
- Details of any collective agreement
- Details of any outstanding claims, such as unfair dismissal.
Failure of the seller to provide relevant information by the deadline, means that the buyer can bring a claim to an employment tribunal within three months of the date of completion. The employment tribunal can order that the seller pay the buyer such amount as the employment tribunal considers just and equitable, meaning the compensation is unlimited, subject to a minimum of £500 for each employee in respect of whom the information was not provided or was defective.
In addition to the above, after 31 July 2014, if you are buying or selling a dental practice with fewer than 10 employees then there are some further changes to the legislation.
TUPE
Currently, the Transfer of Undertakings (Protection of Employment) Regulations, often referred to as ‘TUPE’, state that both the buyer and the seller must inform and consult with an elected representative of the employees.
The TUPE regulations have been amended so that practices with fewer than 10 employees no longer have to have an election, which saves time and money and is far more practical.
Many of the practice owners that we act for believe that, because of TUPE, they are not able to make any changes at all to the employees’ terms and conditions either before, during or after a sale/purchase transaction. This is not actually correct as you can make changes provided that they fall within one of the exceptions as set out in the TUPE legislation. If you use a law firm with a dental specialist employment solicitor, these issues can be dealt with at the very outset of the transaction correctly.
There is still a process to go through with the employees and both the buyer and the seller have a duty to inform/and or consult with the staff in relation to the sale and any proposed changes. If either the buyer or the seller fail to inform and consult, an employment tribunal can award up to 13 weeks actual pay for each employee.
Whether you’re buying or selling a practice, you should consider whether the law firm you chose to use understands your industry and has expertise in, not only the buying and selling of a practice, but employment and due diligence. It is often these details that are overlooked.
CQC
Whether NHS, private or capitation you will have to consider the CQC (Care Quality Commission) when you are buying or selling a practice. It is a legal requirement for all dental practices in England to be registered for CQC purposes and if you find yourself operating a practice that isn’t registered, then the consequences can be disastrous.
In recent weeks the CQC application process has changed. In the past, if you were applying to be registered as a new provider, there were numerous forms to choose from, each of them covering the different ways in which a practice could be run, including partnerships, companies and individuals. Depending on how the practice would be operated, you would select the relevant application and submit this to the CQC. From the 2 June 2014, however, these separate forms will no longer be accepted.
The CQC has taken the decision to amalgamate all of these forms into one comprehensive application where the applicant will complete relevant sections. Whilst not particularly different from its predecessors, this new form does require specific information as to the regulated activities you wish to carry out and can take some time to complete.
If you are in the process of applying to carry out regulated activities, I would strongly recommend that you check the application form you have completed. You do not want to be in a position where you have spent a considerable length of time filling out an application form, only for it to be instantly rejected by the CQC on the grounds the form is outdated. Any specialist dental solicitor will be able to clarify with you whether the correct application is being completed.
For further information contact LCF Law’s dental team for a no obligation/cost consultation. The LCF Law Dental Team acts for dentists and dental practice owners throughout England and Wales providing the full spectrum of legal services applicable to running a practice. Please call 0113 2010407 or email [email protected] for further information.
