What about the employees?

Whether there is a need to streamline the workforce prior to the business sale or matters relating to TUPE regulations (Transfer of Undertakings (Protection of Employment), there are usually employment issues arising from the sale of a business.

Changes to staff structure, sometimes including the dismissal or redundancy of employees, is a commonplace occurrence when a business is being reshaped in preparation for its sale.

This can either be in the years or months prior to selling the business, in order to show greater profitability and thus enhance the valuation of the business, or immediately prior to the transfer to the new owners. Redundancy and staff dismissals are laden with regulations and need to be handled with care in order to avoid any future repercussions.

Another scenario that regularly occurs when a business is being taken over is variation to employees’ contracts of employment. It should be noted that this process (excepting some elements of pension schemes) can only occur in conjunction with employee consultation. As such, it is necessary to seek the advice of an employment expert in these circumstances.

Of course both of the above need to be undertaken within the boundaries of TUPE regulations. TUPE’s purpose is to protect employees when a business is transferred from one owner to another. Within the law, employees automatically transfer from the seller to the new buyer under the same terms and conditions of employment and subsequent variations to employee contracts or dismissals by the purchaser can result in expensive claims and liabilities to the seller.

Victoria Mitchell
Solicitor
Farleys