Employees

Winemaking is labour intensive. No machine can yet pick grapes, so you will need to employ pickers for that as well as a team for the general management of the estate and operations, including sales and marketing.

When buying an existing vineyard, consider the staff already there. In a share sale (i.e. an acquisition of the shares in the existing operating company) the buyer will automatically inherit the staff. In an asset sale (e.g. the property, machinery and goodwill are sold separately), the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) are likely to apply. Under TUPE, employees wholly or mainly assigned to a business/property automatically transfer on their current terms and conditions. In both scenarios, a well-prepared buyer will review the current arrangements to understand who and what they are inheriting and work out whether they fit with their plans. In addition, under TUPE, the buyer and seller must follow a prescribed information and consultation process with staff members.

Alternatively, if the land does not currently operate as a vineyard or winery, the buyer must decide whether it wants to take on existing staff. Sometimes existing staff are critical to a buyer’s intentions (for example, the groundsman who really understands the geology of the soil). Where the buyer does not wish to keep staff on they should ensure that the seller terminates their employment on or before completion and indemnifies them against associated risks (such as unfair dismissal and/or that TUPE should have applied). Where the risk of former staff bringing a claim is high, the sale contract may provide for a suitable retention (a ringfenced tranche of the sale proceeds held back by the buyer until the risk of claims has largely passed).

A buyer will want to incentivise high value, specialist employees like the manager to stay, versus moving to a competitor and not join a competitor. It might be appropriate to agree new terms including retention bonuses and restrictive covenants, preventing them from jumping ship or taking customers or suppliers with them to a future role.

Additional employment issues include:

• Service occupancies: employees might need to live on site, in which case they will most likely need a service occupancy for their accommodation. A service occupancy gives an employee a personal licence – rather than a lease – to occupy the property for so long as they are employed by the employer. Be warned that the threshold for a service occupancy is quite high - the occupation must either be essential for the performance of the employee's duties, or (if not essential) the employment contract must expressly require the employee to live at the property for the better performance of their duties. Setting it out clearly in the contract is usually best. It is important to consider this matter carefully as unless the conditions for a service occupancy are met, an occupier will have a tenancy (a lease) rather than a licence. A tenancy gives additional rights to the employee, including in relation to eviction, and agricultural workers will have a higher degree of protection over and above the rights a tenant of an assured shorthold tenancy (“AST”) will have.
• Immigration: make sure that employees have the right to work in the terms of visa and immigration requirements.
• Employer obligations: have a good payroll process in place, provide correct documents to staff (including mandatory policies) and comply with auto-enrolment pensions obligations.

Succession Planning

Wine is usually a family business. Just as things go wrong in business, they can go wrong in succession planning.

Vineyards and wineries

A great bottle of wine is a wonderfully elegant, simple thing. But the process of making it is complicated. Small variables in soil, climate, management and markets can make the difference between a great year and an average one.