There is no transfer under TUPE on a sale of the shares in the company that runs the business or undertaking.

TUPE refers specifically to a change of employer. On a share sale there is no transfer from one legal person to another legal person; instead the shareholding membership of the legal person (the company) changes.

Failure to comply with TUPE regulations can lead to Employment Tribunal claims, compensation awards, unfair dismissal claims and disputes between buyers and sellers.

Obtaining specialist employment law advice can help businesses identify risks early and avoid costly mistakes.

Business transfers involve a number of legal responsibilities that must be carefully managed by both the outgoing and incoming employer.

These can include:

• Identifying which employees will transfer under TUPE
• Informing and consulting with affected employees
• Reviewing and transferring employment contracts and liabilities
• Managing potential redundancy risks
• Ensuring compliance with consultation requirements
• Dealing with employee objections or disputes

Getting this wrong can lead to claims for unfair dismissal, breach of TUPE obligations and financial penalties.

If TUPE applies, employees generally transfer to the new employer automatically. Their existing employment rights, length of service and contractual terms are usually protected.

The new employer effectively steps into the shoes of the previous employer and assumes responsibility for those employees.

A transfer itself is not a fair reason for redundancy. However, redundancies may be possible where there is a genuine economic, technical or organisational reason requiring changes to the workforce.

Employers should seek legal advice before commencing any redundancy process connected to a transfer.

The preparation and agreement of the heads of terms is an important step that in our experience reduces the cost of selling your business. Usually, the Head of Terms is drawn up after preliminary negotiations, and the actual terms are subject to due diligence.  With a good Head of Terms, all parties know where they stand and the basics of the business transfer are dealt with early on.

We will ensure the Head of Terms is drawn up in a way that provides complete clarity and structure to the sale and purchase. Our due diligence is thorough leaving our clients in a position that allows them to make a fully informed decision based on an expert risk analysis.

When it comes to the sale and purchase agreement, we will ensure your risks and liabilities are reduced as much as possible.  Our expert team will also explain all the contract clauses fully and negotiate key points, including warranties and indemnities to your advantage.