Asset purchases—employment due diligence issues acting for the seller
Asset purchases—employment due diligence issues acting for the seller

The following Employment guidance note provides comprehensive and up to date legal information covering:

  • Asset purchases—employment due diligence issues acting for the seller
  • Effect of TUPE 2006
  • Employee liability information (ELI)
  • Extent of due diligence
  • Data protection issues—the transaction
  • Confidentiality
  • Data protection issues—the target
  • Employees
  • Directors, workers and other personnel
  • Non-transferring staff
  • more

Where a business or asset purchase amounts to a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246 (TUPE 2006), the buyer ‘steps into the seller’s shoes’ and acquires all rights and liabilities in respect of employees assigned to the business being transferred—see: Effect of TUPE 2006 below.

As with share purchases, the starting point for a buyer on the purchase of the business and assets of a company (asset purchase) is the maxim caveat emptor (let the buyer beware). In the case of a relevant transfer under TUPE 2006, the seller will be required to provide specified employee liability information (ELI) to the buyer (see: Employee liability information (ELI), below). However, aside from that obligation, the seller is under no duty to disclose to the buyer any defects, issues or liabilities affecting the business. The buyer will therefore always need to conduct its own investigations, and will instruct its advisers to conduct due diligence on commercial, tax, financial and legal matters (including employment), and to prepare due diligence reports to highlight material issues arising from their review exercise.

Similar considerations will apply in the case of a service provision change. However, a full due diligence exercise is less likely to be available to the transferee on an service provision change (see: Extent of due diligence below, under