From a labor/employment standpoint, anyone considering acquiring a business in Puerto Rico needs to take into account the "Transfer of Going business" clause under Wrongful Discharge Act No. 80 of May 30, 1976.

When a business changes ownership, the employees that remain with the new owners will be credited with the seniority they accrued under the previous owner (plus the seniority they accrue under you). This is important because under Act 80, a business must indemnify an employee who is discharged without cause and; the actual indemnity will vary depending on the years of employment.

Under the Act every employee contracted without a fixed term, who is discharged without good cause shall be entitled to receive: (a) The salary corresponding to two (2) months, as indemnity, if he/she is discharged within the first five (5) years of service; the salary corresponding to three (3) months if he/she is discharged after five (5) years and up to fifteen (15) years of service; the salary corresponding to six (6) months if he/she is discharged after fifteen (15) years of service. (b) An additional progressive compensation equal to one (1) week for each year of service if he/she is discharged within the first five (5) years of employment; two(2) weeks for each year of service between five (5) and fifteen (15) years of service and; three (3) weeks for each year of service after completing fifteen (15) years of service. The purchaser is not obligated to keep the employees.

Under the law, if the acquirer decides not to commence operations with the services of all or any of the employees and hence does not become their employer, the former employer shall be liable for the compensation provided under the Act; “and the purchaser shall retain the corresponding amount from the selling price stipulated with respect to the business.” In case the purchaser opts to continue with the workers and later discharges them without good cause it shall be liable for severance payment under the Act. While the final decision on the fate of the employees is often a point of negotiation between the parties, knowing the actual liability will help the purchaser decides the best course of action.