Our company has decided to sell off part of its operation – the workshop. The workshop will no longer fall under our company and will become a separate legal entity in its own right.

Fred, the soon to be new owner of the workshop, has agreed to take on all 5 members of staff in their same jobs (i.e. the welders will still work as welders, the fabricators as fabricators, etc).

However, we are uncertain about what should happen next to our 5 existing workshop employees. Four of them have only been here for 6 months or less, but the 5th one has had 4 years continuous service length. As we are abolishing the workshop side of things, there will be no suitable alternative employment positions within our company (but, if they agree to work for Fred, they will be working in a similar capacity to as they are now – full time, chance of overtime and in the same location, job titles, etc. The only thing that may change is the wage – but not drastically – and holidays).

What I would like to know is:

1. Do we have to offer all of 5 employees redundancy pay, or just Malcolm as he has been here for 4 years?

2. Does Fred need to take into consideration Malcolm’s length of service (4 years), or will Fred be allowed to put Malcolm back to zero?

3. When the takeover is complete, do the employees have to be signed up on a different contract or can they enforce their existing contract with us (in case Fred wants to offer different rates of pay, holiday, notice periods, etc, but the employees refuse to sign it)?

4. Do we have to give all of the employees an option to take redundancy pay or accept Fred’s new contract (or, in the case of the 4 ‘new’ workers, is it acceptable simply to give notice without redundancy pay)?

Our company will of course be seeking legal advice on this issue, but I hope someone can advise in the meantime so we have an idea of what to expect.

Many thanks


Caroline Ashton