The Exit Toolkit · Sheet 18 of 20
TUPE and your team
What happens to employees when you sell
Share sale: nothing changes
The employer is the company and the company hasn't changed. Staff stay employed on the same terms; only the shareholders are different.
Asset sale: TUPE usually applies
On the transfer of a business as a going concern, employees transfer automatically to the buyer on their existing terms, with their continuity of service intact.
Inform and consult
There are legal obligations to inform, and sometimes consult, affected employees before the transfer. Get the process and timing right, with legal advice, to avoid claims.
Protection from dismissal
Dismissals because of the transfer are automatically unfair in most cases. Buyers know this, which is why employment warranties and indemnities feature heavily in asset deals.
Warranties and indemnities
Expect to promise you have complied with TUPE obligations, and to negotiate who carries the risk of employment claims arising before and after transfer.
When to tell the team
Confidentiality matters during the process, but employees must not learn of the deal in the wrong way or at the wrong time. Plan the communication carefully with your advisors.
Bottom line
Your people are often the most sensitive part of a sale. Handled well, TUPE is routine. Handled badly, it creates liability and destroys the goodwill the buyer is paying for.
Related
General information only, not legal advice. Steven Mather Solicitor is a trading name of Kesters Nook Limited; legal work is carried out through Nexa Law Limited, authorised and regulated by the SRA (number 633024).