MJ O'Connor Solicitors

The Brief

17.03.2007

Selling your business?

The Employees (Protection of Information and Consultation) Act 2006 which has been in effect since 9th April 2006 places an obligation on a transferor of a business (or part of a business or economic entity that retains its identity) to provide information relating to the rights and obligations arising from contracts of employment which transfer to the Purchaser. Such rights and obligations transfer automatically to a purchaser under the Transfer of Undertaking Regulations which have been in place in Ireland for many years.

The seller must now notify the transferee of all the rights and obligations arising under a contract of employment existing on the date of the transfer which will be transferred to the transferee under the TUPE Regulations in so far as those rights and obligations are, or ought to have been, known to the transferor at the time of the transfer. The failure by the seller to notify the purchaser of such obligations does not affect the transfer of those rights and obligations.

If there is a failure to provide information or documents to the Purchaser, the provision of which is necessary for the purchaser to fulfil an obligation owed to an employee and if in proceedings brought by the employee before a Rights Commissioner or an Employment Appeals Tribunal, that forum awards an amount of compensation to the employee for the purchaser’s failure to fulfil that obligation then the Purchaser has a right of action in Court to recover the amount from the seller.

Before the purchaser can proceed with the claim it must serve a notice in writing on the seller indicating:

• The particular obligation which the purchaser considers he or she owes to the employee

• The class of information or document which the Purchaser believes is in the possession or under the control of the seller (and which is not also in the possession or under the control of any employee of the Purchaser) being information or documents of a class which the Purchaser considers an employer must possess in order to fulfil the obligation concerned

• A request to provide the information within a specified period.

• The purchaser must also comply with any reasonable request in writing from the seller for further particulars to be furnished

Therefore if you are selling your business you must provide relevant information relating to the employment contracts otherwise risk the possibility of being sued at a later date by the purchaser.

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