In a share purchase, the identity of the employer remains the same before and after the sale – it is simply ownership of the target company which changes hands. By contrast, in a business purchase, employees may become employed by the buyer itself under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) as a result of the transaction. Deals may be achieved through a combination of the two - a share purchase in the first instance, followed by a TUPE transfer of the newly acquired subsidiary’s staff to the buyer’s own entity on or shortly after completion.
Determining the legal employer is the number one question before embarking on an integration exercise, because it will impact the way communications are framed, documents are drafted and processes are followed.
In some situations, TUPE can arise after a share purchase even where there is no intention to transfer employees’ terms and conditions to the buyer. This can happen if the buyer becomes...
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