My client now wants to know what they can do with the business, as they no longer wish to continue struggling.
The pressures faced by early years childcare providers have been in the spotlight this week, following the revelation by the campaign group Pregnant Then Screwed that they have been inundated with calls about nurseries and early years childcare providers closing at short notice. It is most unfortunate your client finds themselves in this position.
Below, we explore your clients’ options:
1. Close the business and make the employees redundant.
This is not necessarily the cheapest option. For redundancies, consultation is required, even when the business is closing completely. As there are less than 20 employees, this does not have to be lengthy, but it will still be necessary to discuss the closure of the business with the staff, invite them to put forward alternative suggestions, and confirm final payments to them.
If the employees have worked for your client for over two years, they will be entitled to at least a statutory redundancy payment (your client should check their contracts to ensure there are no additional sums owed). Most employees will also be entitled to notice pay and final accrued holiday.
This may not be the most palatable option for your client, especially if they have taken time to build the business and want to ensure their employees and clients continue to have somewhere to go.
2. Sell the business
Selling the business is another option for your client. Selling the business as a going concern, including the premises, clients and client list, equipment etc will engage the Transfer of Undertakings (Protection of Employees) 2006 regulations. Whilst this is not something your client should be concerned about, it is something that they will need to prepare for.
When selling a business that includes employees, the employees, their length of service and their contracts will all transfer to the new employer. The details of this may therefore form part of the pre-sale negotiations. For the employees, this will mean that their employment will transfer in a way that should not lead to changes for them, unless the buyer (or, under TUPE, the Transferee) proposes measures to change terms.
As part of a TUPE transfer, your client will need to arrange for information and consultation with employee representatives, who may need electing if they are not already in place. The information they must share includes:
- that a TUPE transfer will be taking place
- the date on which the transfer is going to take place
- the reasons for the transfer
- the legal, economic and social implications of the transfer for employees affected by it
- any action (“measures”) envisaged by the transferee that will affect employees, such as changes to working hours or cutting generous contractual provisions such as holiday entitlement over and above statutory minimums.
Going down this route may be a little more complicated, but it will allow for business continuity and enable your client to get paid for their efforts put into the business (through the proceeds of the sale), rather than paying out as in option one.
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