Authors: Ashley-Jane (AJ) Lodge, Sarah Townsend
Published: 29 November 2023
Pages: 25

Introduction

There are a number of employment issues which arise when selling or purchasing a business. Each transaction is different and so the issues and process required in each case will vary. That said, the same employment law issues commonly arise.

There is no automatic transfer of employment from vendor to purchaser. Nor is there a default process to follow, or a default employment agreement imposed by law.

The provisions of the Sale and Purchase Agreement (SPA), and each affected employee’s employment agreement, will determine the applicable process and obligations for both the vendor and the purchaser.

There is no “one-size-fits-all” employment clause for SPAs. Relying on precedent clauses from previous transactions may not be appropriate and could impose unnecessary, onerous and unwanted contractual obligations on the parties.

As share sales are relatively straightforward from an employment perspective, the situation of an asset sale is the focus of this paper.

Content outline

• Acting for vendor
• Acting for purchaser