When a business buys or takes over another business there will usually be a transfer of undertakings. If so, the employees contract entitlements are preserved from the transferee to the transferor.

If an employee is dismissed for a reason connected with a transfer then it will be an automatically unfair dismissal. The one year rule still applies, however. The transferee has a potential defence if any dismissal is genuinely for an economic, technical or organisational reason entailing changes in the workforce.

The dismissal must then satisfy the standard test of reasonableness.