25 February 2000

Staff rights high priority when farms are bought

By Louise Rose

FARMERS and agents acting for a seller or buyer must list employment issues near the top of the agenda, enabling possible liabilities to both parties to be fully appreciated.

That is the message in the latest issue of Farmland Market from solicitors Burges Salmon, Bristol.

Employees rights are an increasingly important factor when farms change hands, says the firms Alistair Morrison, partner in charge of conveyancing, Difficulties in negotiating terms relating to employees are worsened because the buyer will often regard his acquisition purely as a land purchase.

When a farm is sold as a going concern, as most are, the Transfer of Undertakings (Protection of Employment) Regulations 1981, will apply. Effectively all full-time and part-time employees assigned to the business being sold – and all the associated liabilities except pensions – will be automatically transferred from the seller to the buyer on the same terms and conditions.

Also an employee cannot be dismissed by either party due to the sale and may be able to claim compensation for unfair dismissal in the event.

Anyone with over a years service can claim and the maximum compensatory award of £50,000 will depend on the salary the employee received and the time taken to find another job.

But not all dismissals at the time of transfer will be automatically unfair. If the employer consults with the employee and deals with the mechanics of termination in the correct way the employers liability will be limited to a redundancy payment. The employee will be entitled to work out his notice period or paid in lieu.

Another key issue is the relationship between the employees continuing employment and his right to occupy his house on the farm. There are three main categories of occupant for these purposes (see table).

Buyers do need to be careful to ensure they understand the exact status of the employee – the distinction between employers rights for each category can be significant.

Tenants rights – how farm sales can affect different occupants

Status Immediate effect of employment Further consequences of termination

termination on occupational rights

Service occupant Right of occupation ends Employer can evict on four weeks notice

Assured shorthold tenant None Employer can terminate tenancy

(often on two months notice)

Full-time protected agricultural worker None Employer can impose fair rent and may

be able to evict if ADHAC procedures

are followed