When buying their first salon, many owners purchase an existing business with an established turnover. Not surprisingly, the focus is often on their vision of the interior design, name and prospects for expansion. A similar situation occurs when existing salon owners buy a second salon.
The current staff, their terms and conditions and other rights are often forgotten. While business transfers are very complex and it is always advisable to obtain professional advice.
However, here is David Wright, who advises habia and a range of salons, answers to some frequently-asked questions about existing staff’s rights.What happens to the existing staff when I buy a salon?
The staff are protected by the Transfer of Undertaking (Protection of Employment Regulations 2006), commonly called TUPE.
The legislation is complex but, essentially, staff transfer to you, the new owner, and have their existing terms and conditions of employment protected. Any dismissal relating to the transfer would normally be unfair. In short, the current staff become your staff.
I am about to purchase an established salon, what can I do to protect myself in terms of TUPE?
I would recommend you request all the following information in writing:
- A list of staff, their dates of appointment and the hours they work
- Their rates of pay and a copy of their contracts
- A copy of all the conditions of service they enjoy
- Copies of personnel policies and procedures and other salon rules
- Details of any current disciplinary warnings
- Details of any other ongoing commitments e.g. college courses
- Importantly – any current claims against the employer. For example, if an employee is pursuing a claim for com-pensation following an accident, you will become liable.
What happens if the staff in the salon I am purchasing do not wish to work for me?
That would be their choice, but they would have no entitlement to redundancy from their current employer and would be deemed to have resigned. Some steps you might take include:
- Ask the existing owner if you could meet the staff before completing the purchase.
- Reassure them and advise them of your plans.
It might be of key importance to retain existing staff as they have an established client base.
When I take over the salon does the staff’s service with their existing employer count towards their entitlement to, for example, notice and redundancy?
Yes it does. Whatever continuous service staff have transfers automatically to you.
What additional rights do staff have under the TUPE regulations?
Employment tribunals have confirmed a number of well-established rights for example:
- If the reason for a member of staff’s dismissal is the transfer – for example, the new owner doesn’t want to take them on – this would normally be automatically unfair and the responsibility would transfer to the new employer
- The right to the protection of their terms and conditions. Therefore they are protected on their rate of pay, commission structure, holiday entitlement etc.
You can of course appoint new staff on your own (different) terms and conditions.
I have recently purchased a salon and discovered the staff have been receiving only 15 days’ paid leave and five days’ unpaid leave per year. What are my liabilities?
Under TUPE, all outstanding liabilities transfer to you the new owner. If any of the staff pursue a claim they would win and be entitled to claim holiday pay in arrears. I suggest you immediately adjust the leave to the minimum 24 days.
The options thereafter are to wait and see if a claim arrives; bite the bullet and pay the arrears; or perhaps consult with the staff and agree that they can have equivalent additional leave over a number of years. This situation illustrates why you must undertake the pre-purchase research outlined above.
Are there any circumstances where I wouldn’t automatically have to retain all the existing staff?
While I would advise great caution if, post transfer, there is an ‘economic, technical or organisational’ reason for dismissal, this may potentially be fair.
An example might be where you have an existing manager and inherit a manager at your second salon. If your view is that one manager can potentially manage both salons, there would be a genuine redundancy situation because of organisational change. I must emphasise that both salon managers would need to be considered equally for the one post. You must not automatically select the transferee.
Another example might be where you introduce a single booking point and therefore don’t need a receptionist at each branch.