buying a business with employees.

zzzLazyDaisy

It is not clear what you mean by 'buying a business'.

However, if this is a limited company, be aware that the employer is the company itself, not the former owner. What this means is that if the former owner dismisses staff and gets it wrong, their claims for unfair dismissal and/or redundancy pay and/or notice pay will lie against the company (which you will then own and will therefore be liable for).

Even if it isn't a company TUPE operates to preserve the employees' rights and continuity of service. So employees are dismissed / made redundant for a reason relating to the transfer (which sounds to be the case) they will have a claim and you may end up liable for some or all of the cost of compensation. You need to at least get an indemnity from the current owner covering any outstanding or potential tribunal proceedings (or indeed any other actions by the current employees such as personal injury claims for example).

EDIT: either way, the bottom line is that you inherit all three employees, with their terms and conditions of contract and their continuity of service intact, and you will also be involved in any unfair dismissal/redundancy/breach of TUPE claims that arise out of the change of owrnership and transfer of the business

You need to get legal advice and fast, before this goes any further!