Company Transactions for SMEs: TUPE and Redundancy Considerations when selling the business

When you are starting to consider the sale of your business, it is so important to make sure that you are having the right conversations about your employees and any impact that the sale will have of them.

Whether you are selling the whole or part of the business, it is quite like to impact your employees under the Transfer of Undertaking (Protection of Employees) Regulations 2006 or the Employment Rights Act 1996.

Whichever direction you decide to go in, it is important that you make sure to follow the right process and to do it properly to minimise the risk of any potential claims from your workforce. Fun fact – claims under TUPE could be against both you, as the seller, and the buyer.

For the purpose of TUPE, there are two obligations to bear in mind:

• Obligation to inform – letting employees know that they may be affected by the transfer, including the reason for it, the implications of the transfer and any measures that you envisage the buyer may take with relation to the transfer, if at all (be careful not to make promises that you do not know if they will or could be kept); and
• Obligation to consult – the consultation is required if the buyer (or transferee) envisages any measures in relation to the transferring employees but the legislation does not define measures and so it is quite wide. Here it is important that any employee concerns or representations are properly considered and responded to.

When the transfer takes place, the buyer will also need to consider whether there are any changes that need to be implemented – for example, if the buyer already has employees in place to carry out the necessary functions then they may need to consider redundancy consultations with the transferring employees which will be in addition to the TUPE regulations. If certain conditions are met, and the buyer is minded to do that, they may be able to start the consultation before the transfer is effected, when the employees are still employed by the seller.

It is very important that these decisions are not taken lightly – the businesses should avoid cutting corners so that they avoid the risk of any potential claims such as for unfair dismissal and / or failure to consult.

This is not an easy process to wade through and so we would strongly recommend that you seek legal advice to support you through the process and minimise any risks as a result. If you would like to discuss, please do not hesitate to contact myself or our expert Employment Team.

*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*