After May 1, 2014, the employment due diligence enquiries must be provided 28 days before the date of which the buyer legally owns the practice (completion). This only applies to an asset purchase and not where shares are being transferred. Before May 1, 2014, these enquiries had to be made 14 days in advance. The information which 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, discrimination)
Failure of the seller to provide such information, or if the seller does not provide all of the relevant information or provides the information after the deadline, means that the buyer can bring a claim in the 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; which means 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, since July 31, 2014 if you are buying or selling a dental practice with fewer than 10 employees then there are some further changes to the legislation that affects you.
Previously the Transfer of Undertakings (Protection of Employment) Regulations often referred to as ‘TUPE’ stated that both the buyer and the seller must inform and consult with an elected representative of the employees. This meant a dental practice with as little as two employees had to go through an election process to elect a representative to satisfy these
requirements, which was very often a nonsense exercise as it was easier for the buyer/seller to inform and/or consult with the employees directly. The TUPE regulations have now 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 practice owners 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. There are exceptions within the legislation which will allow you to change the opening hours of the practice, change the date on which the employees are paid or make redundancies. Most buyers are advised that they can’t do this and this can slow down progress on the transaction whilst a buyer and seller debate the issues. However, use of a law firm with a dental specialist employment solicitor means these issues can be dealt with at the very outset of the transaction in the correct way.
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 dentistry and has expertise in not only the buying and selling of a practice, but employment and due diligence. It is often these details which are overlooked.
CQC
You will have to consider CQC 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 June 2, 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 onerously filling out an application form only for it to be instantly rejected by the CQC on the grounds that the form is outdated. Any specialist dental solicitor will be able to clarify with you whether the correct application is being completed.
Change of application forms aside however, you must always be aware whether you are carrying out the correct CQC application process. The CQC applications differ from NHS to private practice, therefore if you are buying or selling a practice you should always check with your solicitor if you are proceeding down the correct avenue.