Strict observance of the labor rights of the company's employees

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subornaakter40
Posts: 667
Joined: Sat Dec 28, 2024 6:01 am

Strict observance of the labor rights of the company's employees

Post by subornaakter40 »

Inclusion in the sales contract of a condition regarding the absence of unaccounted obligations.

It would seem that there is nothing dangerous in such a requirement, especially if the seller is confident in his top managers (who are empowered to sign contracts, make deals, etc.). However, there is no guarantee that any of these people will not harbor a grudge against you when you part ways. What are the consequences? The former director, for example, will believe that he did not receive all the payments due from you when selling the company. And, in order to get his own back, he will agree to the buyer's offer (not free, of course) to sign some contract or bill of exchange retroactively.

No outstanding tax or other charges.

For example, you are starting to sell a school principals email list business and during the pre-sale preparation you conduct all the necessary checks (including taxes), which show that everything is in order with your payments, there are no debts. But the law allows the tax office or the buyer to initiate a new check, and it can give completely different results, after which you will end up in court (where the buyer's lawyers will represent the company).

What to do? Demand the presence of your own representatives in court, who will defend the interests of the company. And firmly adhere to the position that legally, the filing of a claim by tax authorities (or anyone else) does not mean that the purchase and sale agreement was violated. This will become a confirmed fact only if the case is finally lost, for example, after consideration in the Supreme Arbitration Court of the Russian Federation.


Giving such a guarantee when selling a business would be imprudent, especially if we are talking about a fairly large company with hundreds of employees. It is not a fact that all divisions (or companies in one group) have never violated the terms of employment contracts. Maybe someone was fired illegally and filed a claim in court? And quite recently, and you do not even have information about it yet? And if you sign a contract with such a guarantee at the current moment, then in fact it will already be a violation.

What to do? You can leave in the contract only those employees about whom you have no doubts. These will most likely be leading top managers, special specialists, such as, for example, the chief technologist (who may even mean more to the company than the director), etc.

Responsibility for existing legal obligations.

The buyer may insist on such a guarantee because he wants to protect himself (and this is understandable) so as not to end up with a company with unreliable counterparties who will start refusing to pay their bills.

But how can you take responsibility for the behavior of your counterparties? For example, they may start terminating contracts due to the company's failure to fulfill its obligations (due to constant violations of shipping deadlines or something similar). This would at least be understandable, but often the grounds for terminating contracts are invented on purpose (the counterparty simply looks for reasons to refuse to pay, or files a lawsuit to delay payment during the proceedings). It is clear that such a claim will be, as they say, far-fetched, but formally it will turn out that you have violated the terms of sale (on fulfilling legal obligations). And you will still have to deal with the consequences of such a situation.

What to do? Here we can recommend the same course of action as in the previous point: do not give such a guarantee regarding absolutely all counterparties. Select only the main ones that are of the greatest importance for the business.

No litigation regarding the business offered for sale.

No litigation regarding the business being offered for sale

Buyers very often want to receive a guarantee from the seller that the company is not involved in legal or administrative proceedings (or that the company's assets are not at stake in such disputes).

Here you should think a thousand times. Keep in mind that when you sign the contract, you may not even suspect that such a dispute exists. Such information does not appear immediately on the website of the Supreme Arbitration Court of the Russian Federation (and this, by the way, is a high authority). On the website of the State Automated System "Justice", data on disputes and courts will be posted even later. And if there is some administrative proceedings regarding the business put up for sale, then you will most likely only find out about it after you receive a notification from the administrative body handling your issue. It will only work faster if you have employees who do nothing but regularly study the contents of the above and other government websites (but this is unlikely to be the case).

Next: where is the guarantee that today you will sign a contract (knowing for sure that there are no disputes regarding the company), and in a couple of days no one will sue your organization?

And that's not all. Even the buyer himself can initiate a legal dispute, involving third parties. Then it turns out that you have violated the contract and must bear the responsibility for it.

What to do if the buyer still insists on such a guarantee? Well, let it be there, but with so-called filters. That is, you can make a reservation that the guarantee applies only to disputes whose amount is not lower than the specified limit (whether it is a dispute regarding the company itself or its assets). Plus, specify that only disputes arising within the time limits limited by the contract will be considered a violation (and specify them precisely).

Sales are a serious matter and not so simple, especially when it comes to selling a business. And believe me, education and a degree are, of course, good, but you can’t do without sufficient experience. Of course, you can and should learn from the achievements and mistakes of others, but every business is unique in its own way, and there are specific features and nuances everywhere. Study all the recommendations above and apply them to your own situation when you need it.
yadaysrdone
Posts: 15395
Joined: Sun Apr 13, 2025 9:48 am

Re: Strict observance of the labor rights of the company's employees

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