M&A: Avoiding paying redundancy by selling the company? (UK)

Question

Corporation A owns many smaller business units. Corporation A agrees to sell Business Unit X to Corporation B.

Business Unit X has a number of employees who are effectively redundant because their jobs have ceased to be relevant, but they continue in 'zombie' roles and have not gone through a redundancy procedure because their contracts and long service give them exceptionally generous redundancy terms that Corporation A does not want to pay.

Once Corporation B takes ownership, Corporation B realises that Business Unit X has a small but significant number of employees who were dead wood even before the acquisition, and those employees are swiftly made redundant. Under UK TUPE regulations, Corporation B must honour these employees' contracts, including their generous redundancy terms.

1. Does Corporation B pay the redundancy costs?
2. In M&A contracts, is there typically a clause which obliges Corporation A only to transfer genuinely productive employees?
3. If the answers to Q1 and Q2 are both 'yes', how would Corporation B likely enforce this clause and / or reclaim costs?
4. If the answer to Q2 is 'no', what is to stop Corporation A transferring other surplus employees from Business Unit Y into Business Unit X at some earlier moment?

To be clear: this is different to the common situation whereby otherwise productive employees are made redundant after a merger or acquisition because their roles do not fit the new corporate structure. I am interested in the (rare?) situation where one corporation knowingly transfers effectively-redundant employees to another corporation via a divestiture with the deliberate intention of avoiding redundancy costs.

Answer 1

Does Corporation B pay the redundancy costs?

Yes, that's what TUPE does, and all the usual stipulations and conditions would apply. Hypothetically there could be a separate agreement between A and B for A to reimburse B for any redundancy costs for former A employees I suppose but that wouldn't change that legally it is still B who is responsible for paying it to the employee.

In M&A contracts, is there typically a clause which obliges Corporation A only to transfer genuinely productive employees?

I suppose such a clause would be feasible but in my (admittedly limited) experience with such agreements I've never seen one.

If the answers to Q1 and Q2 are both 'yes', how would Corporation B likely enforce this clause and / or reclaim costs?

If there were such a clause I expect remedies would be specified, failing that they would have to litigate.

If the answer to Q2 is 'no', what is to stop Corporation A transferring other surplus employees from Business Unit Y into Business Unit X at some earlier moment?

In theory nothing stops them attempting to do so, assuming the employees go along with the initial transfer - but in practice I can't see it working, this is why the due diligence process exists. Shipping all your dead weight to a different business unit and then selling it off is going to create a paper trail a mile wide for the prospective buyer to see.