Letter to staff following a share purchase

If you buy an existing company by way of a share purchase, you can use our letter to write to all the employees of that company letting them know what has happened.

Letter benefits

When you purchase the shares in a limited company, the employees of that company still have exactly the same employer, as their employer remains the limited company. In law, a limited company is a separate legal entity as distinct from its shareholders. All that’s therefore happened is the company now has new shareholders. As nothing has really changed from an employment perspective, there’s no legal obligation to send the employees our Letter to Staff Following a Share Purchase. However, it’s a good thing to do from an employee relations perspective, plus it may be necessary if there will be changes to employees’ terms of employment as a result of the share sale. This is likely to be the case if the employees participated in group occupational pension or benefit schemes which will no longer be available when the employing company leaves the group of companies that it was a member of. If these are contractual benefits, make sure you provide alternative schemes which are at least equivalent, to avoid any possible breach of contract and/or constructive dismissal claims. Otherwise, any change to employees’ employment terms will need their express agreement, preferably obtained in writing, i.e. the ordinary employment law principles on changing terms continue to apply.

Letter contents

Our letter is drafted on the basis that it’s to be sent by the company’s new owners following the share purchase, but equally you could amend it so that it’s sent by the company’s old owners before the share sale. It sets out the date of the share purchase and then reassures the employee that their terms of employment remain the same and their period of continuous employment is unbroken. However, there’s an optional paragraph you can use if there is to be a change in occupational pension scheme as a result of the share purchase. You can amend this as appropriate to also incorporate any other affected benefit schemes.

Statement of change

S.4 Employment Rights Act 1996 requires that if any of the provisions required to be included in the written statement of employment particulars change, you must give the employee a statement containing particulars of the change at the earliest possible opportunity and, in any event, no later than one month after the change takes effect. As well as including information about pensions and pension schemes, the written statement must include details of any other benefits, including non-contractual ones. Therefore, if any group occupational pension or benefit schemes have changed, or are to change, as a result of the share purchase, you may also want to attach a revised written statement of employment particulars (or employment contract) to the letter, amended to include the relevant pension and/or benefit scheme details, if the letter itself contains insufficient particulars about the change.