Q&As

A company is looking to purchase another company. The transferor has requested that the deal is conditional upon a key employee signing up to a contract requiring him to stay with the company for seven years post-transfer. What is the best way of dealing with this?

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Published on LexisPSL on 09/11/2016

The following Employment Q&A provides comprehensive and up to date legal information covering:

  • A company is looking to purchase another company. The transferor has requested that the deal is conditional upon a key employee signing up to a contract requiring him to stay with the company for seven years post-transfer. What is the best way of dealing with this?

If there is a share purchase, the identity of the employer remains unchanged and, if the new owner wants to ensure that a key employee or MD signs up to a new long-term contract, this will be a matter for negotiation between the parties.

For further information on employment issues on share purchases, see Practice Notes:

  1. Share purchases—employment issues acting for the buyer

  2. Share purchases—employment issues acting for the seller

If there is an asset purchase to which the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006), SI 2006/246 applies then, subject to an employee's right to object to the transfer (see Practice Note: Employee transfer—Employee right to object to the transfer, the contracts of employment of those employees employed by the transferor and 'assigned to the organised grouping of resources or employees that is subject to the relevant transfer', and which would otherwise be terminated by the transfer, automatically transfer to the transferee and have effect after the transfer as if originally made between the employee and the transferee.

For further information, see Practice Notes:

  1. TUPE—business transfers

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