Employees are the one thing on an asset sale that moves automatically — and the one thing a share sale leaves entirely untouched. Getting that distinction wrong is a common and expensive error, because nothing the buyer and seller agree between themselves changes the employees’ position.
Automatic Transfer, and What Comes With It
On an asset sale amounting to a transfer of an undertaking, the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 apply: employees assigned to the business transfer to the buyer by operation of law, with their existing terms, accrued rights and continuity of service intact. No new contracts are needed, and none can defeat it. What comes across is broadly the employment relationship as it stands — terms and conditions, continuity, accrued holiday, notice periods based on full service, and any historic issues attaching to those employments. Occupational pension rights are treated differently under the Regulations and need specific advice rather than assumption. On a share sale the employer company is unchanged, the shares simply change hands, and the Regulations are not engaged at all. For a buyer, this makes employment a due diligence priority on an asset purchase: terms, service dates, benefits and any live grievances are being acquired alongside the trade.
Consultation, Redundancies, and the Timetable Problem
Both transferor and transferee have obligations to inform, and in certain circumstances consult, employee representatives in advance of the transfer — the fact of it, its timing, the reasons and the implications for employees. This is where deal timetables come unstuck, because a transaction kept confidential for months meets an obligation requiring disclosure to representatives before completion. Build it into the timetable at the outset rather than discovering it as a completion formality. On redundancies: a dismissal by reason of the transfer itself is prohibited, while dismissals for an economic, technical or organisational reason entailing changes in the workforce may be capable of justification — a specific test rather than a general permission, and the point at which disputes most commonly arise. Where redundancies are contemplated, take dedicated employment advice; redundancysolicitors.ie covers that properly, and the sale agreement is not where it gets resolved. Finally the seller-side point: undocumented employment terms become a warranty or an indemnity you carry. Fixing the paperwork before going to market is among the cheapest items on the readiness list.
Contractors are the quiet risk. Arrangements that have run for years as “self-employed” sometimes look a great deal like employment when a buyer’s solicitor examines them — and that question is far better answered before it is asked.
Selling or buying a business with staff? 01 5827148.
Richard O’Shea — Solicitor & TEP
Solicitor at Mary Molloy Solicitors, established 1981, and a TEP of the Society of Trust and Estate Practitioners. The firm acts for buyers and sellers on business sales and acquisitions — structure, heads of terms, due diligence, the sale agreement, warranties and disclosure, completion and what follows it. Because a substantial share of Irish business sales are retirement exits, the firm’s estate and succession practice sits alongside the transactional work: the deal and what happens to the proceeds are usually the same client’s problem. Nothing here is tax advice — structure is tax-driven and that belongs with your accountant and Revenue, before heads of terms are signed. 01 5827148 · richardoshea@marymolloysolicitors.com · LinkedIn
General information, not legal advice. This website contains general information about Irish law on business sales and acquisitions. It is not legal advice and does not create a solicitor—client relationship. Every transaction turns on its own facts — the structure, the documents, the parties, the consents required — and advice on yours requires a consultation.
Nothing here is tax advice, and tax drives structure. The choice between an asset sale and a share sale is very largely a tax question, and it should be settled with your accountant or tax adviser, and by reference to Revenue’s own guidance, before heads of terms are signed rather than afterwards. This firm does not advise on tax, does not state rates, thresholds, reliefs or conditions, and does not indicate any tax outcome.
No valuation advice. This firm does not value businesses, does not suggest multiples and does not advise on price. Valuation is for accountants and corporate finance advisers, and it is a separate exercise from the legal work.
Never both sides of the same deal. The firm acts for buyers and, in separate transactions, for sellers — but never for both parties to the same sale. Conflicts are checked at first contact, before any substantive discussion, which is why the first email should name every individual and entity involved.
No outcome or timeline is promised. Nothing on this site states or implies that a transaction will complete, that a consent will be obtained, that a warranty claim will succeed, or that any deal will proceed to a particular timetable. Where another jurisdiction is involved, the law of that jurisdiction applies to what happens there and requires local advice; this firm advises on Irish law only.
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