HR tasks on the sale and purchase of companies


  • This guide looks at the key issues and practical considerations for HR teams in respect of a pending sale or purchase of their employers’ shares or assets.
  • It sets out the key transactional steps, how they impact upon your HR role and the key practical tasks you will need to complete.


  • Transactions will either be the purchase (or sale, if your employer is the ‘target’ business) of an organisation’s specific assets or its shares.
  • Very briefly, in a share sale, the target’s shares, its business, workforce and debts are being bought.
  • In contrast, an asset sale means the purchaser is buying specified assets and the shares are not sold to the purchaser.
  • The nature of the transaction is important because it will dictate how much focus is on the target’s workforce and their contracts and whether the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) are triggered.
  • Share sales will not trigger TUPE unless the target’s business is re-structured immediately or soon after the transaction completes, and as a result of the share sale.
  • TUPE obligations are not dealt with in any detail in this Checklist.


Typically, the HR team will only become involved once the principal decisions regarding the corporate transaction have been decided. As early as is possible, you should:

  • Identify the transaction team within your business and the law firm representing you, and the scope of your remit in respect of HR. Agree with the individual(s) leading the transaction:
    • who is permitted access to the transaction information
    • the level of confidentiality required by the transaction team
    • what the key issues are for your business
    • responsibilities for tasks
    • whether you are permitted to telephone and email your employer’s lawyers directly
  • Decide whether you need to set up internal reporting structures to avoid duplication and ensure that the team speaks with ‘one voice’.
  • Decide if it is necessary to ask all employees involved on the transaction to sign a confidentiality letter regarding the proposed transaction.
  • Identify and record the transaction’s confidential project code name and passwords used for data sites and/or documents (if any), and who has been given this information.
  • Remind all employees involved that passwords should not be provided to unauthorised individuals unless agreed by the transaction team.


  • Due diligence, or DD as it is commonly referred to, is the exercise conducted by the purchaser before the transaction is completed.
  • It is an opportunity for the purchaser to review all the relevant documents and identify any legal or financial issues or risks posed by the business.
  • For HR, such issues could include possible pension shortfalls, individuals engaged as consultants but whose engagement/employment status is dubious, and tribunal and high court litigation.

Beginning due diligence and responsibility for it

  • The purchaser’s lawyers will usually instigate and drive the DD exercise by providing a list of information they wish to see from the target’s HR team. Although the information requested may vary depending upon your industry (for example, intellectual property will much more important for those in creative or scientific businesses than in other industries), you will almost always be asked for:
    • details of the entire workforce (including contractors, non-executive directors, temps and agency staff)
    • employment or engagement terms
    • contractual and discretionary bonuses and/or benefits
    • any threatened or actual litigation (either in the employment tribunal or high court)
    • any trade union or employee forum which exists
    • the existence of historic TUPE terms
    • immigration permissions and
    • employees on long-term sick leave or family related leave
  • If you are the purchaser’s HR team, your involvement with the DD exercise may be fairly limited, particularly if it is a share purchase only with no proposed subsequent business re-organisation proposed. If there are particular HR issues you are concerned with, speak with the transaction team so they can make any necessary further enquiries or take appropriate action.
  • If the list of information requested seems overly long or will be overly time consuming for you as the target’s HR team to collate, you can ask the purchaser to agree to reduce the information requested. Don’t forget that in a TUPE situation you only need to provide specific information (the ‘employee liability information’) and can refuse requests which go further than that. To negotiate a reduced list, ask your lawyers to agree this with the purchaser.
  • As the target’s HR team, you should:
    • provide data and state that it is accurate as at a particular date, e.g. ‘all employees by X business as at X date’. This makes it easier for your management team to feel confident when warranting it is true and accurate as at that date
    • make sure your records regarding contract terms, employee numbers, details of all leavers in the last 6 months, and immigration checks are up to date and are ready to be provided to the purchaser’s legal team. If you have one (or more) standard contracts for employees or contractors, you could simply provide the template(s) only and warrant that all other employees or contractors are on the same contract. Alternatively, you may prefer to scan and disclose every single contract which exists, and place the burden of checking them on the purchaser’s legal team
    • identify and provide the contract terms of any individuals employed or engaged on different or unusual terms
    • collate all the contracts for all key and senior managers, and directors (including non-executive directors)
    • identify contractors who have not yet signed contracts, and get these in place beforehand
    • make sure that your contracts with consultants and agencies are up to date and compliant with the relevant legislation
    • identify if there are any implied terms which have been accrued by way of custom and practice, and which employees now expect will apply on each occasion
    • ensure, if you are a sponsor for UKBA purposes that your recording systems are all compliant
    • identify and collate any threatened or actual litigation, whether in the employment tribunal or High Court
  • While you can provide the information in paper format or can invite the purchaser to view it at your site, normally the parties agree to use a digital ‘data room’ which is a secure website which only named individuals can access to upload or read documents.

The process after the due diligence exercise

  • Any employment-related concerns or risks are identified and assessed by the purchaser’s lawyers, following which they produce a report for the purchaser’s management team to consider.
  • This report’s contents can on occasion affect the purchase price, or terms of the transaction, although it is rare for employment-related matters to have this effect. This is because employment-related matters tend to be of lower financial value than a key commercial contract.
  • If you are the purchaser’s HR manager, you may be asked to discuss the employment DD report findings with the transaction team.
  • The target’s transaction team and HR manager will not see the DD report.
  • The DD report is used to prepare contractual promises, called warranties and undertakings, about the employment situation and information provided to the purchaser.
  • As the HR adviser for the target, you may be asked to reassure the management board that the data is correct before they give these promises.

Due diligence on TUPE transfers

  • On a TUPE transfer you will either be working for the outgoing employer (called the ‘transferor’) or for the incoming employer (called the ‘transferee’). This section sets out your legal obligations on these transfers. Where we have said below you must do something, this is a legal requirement.

Obligations of the outgoing employer’s HR team

  • As early as possible, ascertain when the transfer will take place, diarise all relevant dates and ask the incoming employer to provide details of any ‘measures’ they intend to take.
  • You must identify which employees (if anyone) are ‘affected employees’ and who their representatives are.
  • You must send the employee liability information (ELI) to the incoming employer’s team not less than 28 days before the date of the TUPE transfer.
  • You must inform the affected employees’ representatives of the proposed transfer in good time.
  • If applicable, you must consult with the affected employees’ representatives about the incoming employer’s proposed measure, i.e. those measures which the business envisages taking in connection with the TUPE transfer. Consultation can be done jointly with the incoming employer if agreed.

Obligations of the incoming employer’s HR team

  • You must identify whether any of your employees are ‘affected’ by the proposed transfer and their representatives with whom you must inform and, if applicable, consult.
  • You must tell the outgoing employer in good time of any measures you plan to take in connection with the transfer. If required, you should make arrangements with them to consult with the transferring employees about the measures.
  • Request the ELI and any additional information about the transferring employees from the outgoing employer as early as possible to ensure you have enough time to review it.
  • Review the ELI and provide your findings to your transaction team. If required, ask for more details from the outgoing employer. Identify whether there are any issues which might affect the commercial terms of the transaction, for example:
    • Are the key staff transferring?
    • Is there any costly ongoing or threatened litigation which your transaction team will want to seek indemnities from the outgoing business and/or which might affect the purchase price?
    • Are there recurring disciplinary matters or grievances which indicate ongoing underlying issues?
  • After the transfer date, confirm to employees that their employment has transferred to you.


  • Within the limits of any confidentiality obligations agreed by the parties, you will need to decide how to deal with employee questions as and when news of the transaction emerges. Every business and transaction is unique, but the smoothest transactions happen when your senior management team have decided in advance who will be told about the proposed transaction, when that information will be provided and what information will be given to both employees and press enquiries.
  • If TUPE is triggered, this will of course impact upon the timing and nature of any internal communications. Even if it is not triggered however, it may still be worthwhile making an internal announcement to employees explaining what is happening and reassuring them about the effect it will have on them.
  • Legal advice should be taken if either the target or purchaser is a publicly listed company, as particular rules apply for such entities which seek to limit any potential insider share dealing.