What is the position regarding employees during a business sale?

The application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 ('TUPE') to the sale of the business is often the most difficult problem faced by the parties to the transaction.

In summary TUPE applies where there is a "relevant transfer", which more often that not will include an insolvent asset sale. Where TUPE applies the contracts of employment of the employees in the business being sold are deemed to be transferred automatically from seller to buyer without variation, the employees are protected against dismissal connected with a TUPE transfer and there is a duty on the parties to the relevant transfer to inform, and possibly consult with, recognised trade unions or elected employee representatives.

This is however a complex and, in some respects, uncertain area of law and so specialist advice is recommended.

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