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Buying/Selling a business and TUPE

If you’re looking to expand your business through the purchase of another company or selling your business as a going concern, it’s likely that the TUPE regulations will apply to the transfer if the business in question employees people.  Even if you’re not intending to take on employees of the existing business that you’re buying, they may still transfer automatically on completion of the sale under TUPE.

It’s important to consider the impact of TUPE when undertaking any business sale or purchase. We can advise you whether TUPE applies and, if so, what you need to do to comply with it.  

Whether you’re buying or selling a business, TUPE requires you to consult with your employees about the process and explain how it will affect them. Failure to follow the consultation requirements can result in employees being entitled to compensation of up to 13 weeks’ pay.

If you’re selling a business, you must provide the buyer with certain specific information about your workers not less than 28 days before the transfer is due to complete.  You also won’t be able to dismiss employees prior to sale if the reason for the dismissal is the sale of the business, unless certain exceptions apply.

If you’re buying a business, you won’t be able to dismiss employees if the reason for the dismissal is the transfer, unless certain exceptions apply. You are also prevented from changing incoming employees’ terms and conditions of service but, again, there are some restrictions that apply. You will need to pay particular attention to the pension contributions paid to the incoming employees. These should mirror those previously made by the selling company, unless they are less than the contributions you make to your employees.

How we can help

The law surrounding TUPE transfers is complex and legal advice should be sought be both buyers and sellers long before a transfer is due to take place. We can provide you with clear advice and guidance when planning your strategy for a transfer to satisfy the various requirements. We work closely with our commercial property and corporate/commercial teams, allowing the firm to provide you with seamless, multi-disciplinary specialist advice when you’re buying or selling a business.