The TUPE regulations will govern this situation because when a business is purchased as a going concern, all employees will automatically have a right to transfer with the business and continue working in their jobs for the foreseeable future. Simply dismissing them would be ‘unfair’ and potentially lead to tribunal claims.

You should note that the employees are not just the concern of the outgoing owner, but yours too. Although the vendor has strict duties of disclosure under the legislation, the purchaser has a duty to employ transferring employees unless there is an ETO (Economic, Technical or Organisational) reason to dismiss them.

In your case it sounds on the face of it as though you have an ‘Economic / Organisational reason’ which would qualify under the regulations, and permit you to make your surplus employees redundant, but without more detail I cannot be sure. This guide is comprehensive and provides the latest information for purchasers as well as vendors and employees when it comes to complying with your duties under TUPE:

http://www.dti.gov.uk/files/file20761.pdf

If it becomes more subtle than the scope of the guide, then you should see a legal advisor as the penalties for getting it wrong can be expensive.

See also: What should you include in an employment contract?